Personal finance

Should You Refinance Your Student Loans Before Federal Payments Restart? | Personal finance

Private lenders offer certain protections, but they are neither guaranteed nor standardized. This means that if a borrower refinances their federal student loans with a private lender and later experiences financial difficulty, they will likely be stuck with payments and could end up defaulting.

Who should refinance now?

Borrowers like Frey, however, are ideal candidates for refinancing, even with federal debt. His income and credit rating have improved since taking out his first loans, which has allowed him to qualify for the lowest possible rates. Combined with an aggressive repayment strategy, this could help her clear her huge balance much faster. And with a job in a medical field that promises a lucrative career, the chances of him not being able to pay the payments in the future are slim.

The characteristics necessary for refinancing to be a smart idea – a high salary, a secure job, and a lot of debt – make the process very common among doctors, dentists, lawyers, and MBA holders who don’t qualify. or would not benefit. a lot of forgiveness programs.

Most of these borrowers have some time before they need to act, as today’s low rates are expected to persist until early next year. Hornsby advises borrowers who want to refinance to prepare to apply in early January, as refinancing offers are valid for 30 days, so you can get a good rate while taking advantage of the full federal forbearance period.

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