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Refinance College Loan

Receiving a college education may be the single most important accomplishment that one may achieve in their entire life time.

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Many borrowers facing astronomical student loan payments each month may want to refinance college loan debt. By choosing to refinance college loan debt, students can lower monthly payments and lengthen the amount of time they have to repay their loans. The average student at a four-year college leaves with $26,119 in student loans according to the American Council on Education. For private schools, the average debt amounts to $29,000. Furthermore, the rate of private loan origination has risen by 734% over the last decade, and the National Center for Education Statistics reports that 65% of college graduates leave school with some form of student debt.

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When a borrower chooses to refinance college loan debt, he or she makes an agreement with a lender to either lengthen the life of the loan, lower monthly interest rates on the loan, or consolidate multiple loans in order to reduce the over all monthly payment.

Reasons to refinance college loan debt include:

• Save money by refinancing
• Lower monthly payments
• Lengthen amount of time to pay off loans
• Consolidate many loans from many lenders

Because government lenders cap the amount of money students can borrow each year, many of these borrowers have both private and government funded loans. Each of these lenders requires a separate payment each month, and when combined, these payments can severely harm a borrower financially after graduation. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act makes relinquishing these loans through bankruptcy virtually impossible. Students who cannot meet their financial obligations after they graduate need to think of other ways to manage their debt. The choice to refinance college loan debt often proves the easiest and most useful option available.

For borrowers having trouble with monthly payments, consolidating multiple loans or lengthening the life of the loan can help to alleviate this problem. When the loan’s life grows, the monthly payments decrease. When multiple loans undergo consolidation, the monthly payment becomes a single, manageable sum. These options ultimately cost the borrower more money because the loan or loans collect more interest over the long run, but the borrower has longer to pay down the loan, which makes the overall sum more manageable. In particular, graduates facing bankruptcy or foreclosure may want to take advantage of these options, because they lower monthly payments immediately and make the overall debt more surmountable.

By deciding to refinance college loan debt, borrowers can also save money. If a local lender offers to refinance the loan at an interest rate lower than the rate at the time of the loan’s origination, the borrower saves money in the long run by reducing the overall amount of interest he or she will need to pay down. The smart borrower pays attention to offers to refinance that reduce the interest that the loan carries. This can help borrower’s facing high interest rates reduce their debt by making the interest on the loan more manageable.

Refinancing may prove a smart choice for many types of student loan borrowers, but students need to pay attention to the type of loans they have taken out in order to be savvy borrowers. Government loans and private loans may carry different interest rates and repayment options, and a student may loose these benefits by choosing to refinance these loans together, or choosing the wrong lender. The smart borrower may choose to refinance these loans separately in order to retain the benefits. Many lenders offer great options for refinancing, and students that research their options before going forward may find that they have a better deal after refinancing than previously.

Need to refinance a college loan?
Get refinance college loan help today.