Refinancing occurs when a company buys all your current student loans and issues a new loan to pay off. You will receive a new rate, but you may lose flexibility of payments and special benefits that were available through individual lenders or the government. Can you refinance a Sallie Mae student loan?
Is Sallie Mae loan right for you?
College costs have risen sharply in recent years, and federal direct subsidized and direct non-subsidized loans have strict limits on the loan amount. If you need extra money to pay for a school, it may be a good idea to use a private student loan from a lender like Sallie Mae.
Questions to answer before consolidating or refinancing student loans
You can make one lower monthly payment; however, before you decide to consolidate or refinance, you should consider the pros and cons of each option. Answer the following questions before you take action:
- Do you save money or do you just pay in the long run, so you will eventually pay back more throughout the loan period?
- Will you lose any ongoing student loan benefits, such as repayment options or forgiveness of a public loan?
- Is your credit rating sufficient for the lender to approve you for consolidation or refinancing?
- Will your new loan be considered a student loan or a personal loan? If this is not a student loan, will you lose interest relief?
- Will you have to pay for services to refinance student loans?
- Will you lose any discounts you had with your lender?
- Should you refinance Sallie Mae loans?
By refinancing student loans, you lose all the benefits of an existing loan. Sallie Mae student loans offer certain features that refinancing lenders may not have, including:
Payment transfers. Sallie Mae allows you to defer payment if you return to school or start an eligible internship, stay or internship. Sallie Mae also offers military adjournment.
Temporarily reduced payments. Sallie Mae has a graduated repayment period that allows only interest-bearing payments for 12 months. This option is not available after the first year of repayment.
Edition of the signer. If your Sallie Mae loan has a counterparty, you can release him after having made 12 payments on time. This time period is shorter than the offer of many refinancing lenders.
Bottom line: Should you refinance Sallie Mae loans?
If you are considering refinancing Sallie Mae loans, you need to find a private lender that offers refinancing loans. You also need to make sure that you can qualify for a new loan that is better in some respects than the old one – either because the monthly installment is lower, the rate is lower, or both. If you can lower the rate and free more money in your budget, it’s probably worth refinancing your loans.