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Student Loan Refinancing Even If You're Not Going Back To School

What you'll learn: What to consider when refinancing your student loan


If you’re a recent college graduate, you may be feeling nostalgic for their old academic routine. Getting through college may have been tough, but student life had at least one big advantage: there weren't any student loan payments. Both the monthly payments and the total amount owed can be pretty daunting.

If you're worried about your student loan payments, refinancing could be your answer. With a stable job and good credit — or even decent credit — refinancing your student loan could let you lock in low interest rates and lower your monthly payments.

But should you refinance your student loans? Here are five questions to answer before you decide.

Can you afford your monthly payments?

If your current monthly payments just aren't working for you, the first thing you should do is talk to your lender to see what your options are. Federal student loans offer income-driven repayment options that can lower your payments if you're not making much money, which can help you manage your loan. However,  with private loans you're likely to have to refinance if you want to change up your payment plan — meaning you'll get a brand new loan you use to pay off the old loan. The new loan will have different payment terms, which could include lower monthly payments and interest rates, so you pay less.

Are you juggling a lot of different loans?

Even if your total loan payments aren't killing your pocketbook, you may be having trouble tracking multiple loans. The more student loan bills you're juggling — each with its own amount and payment date — the more likely you are to mess up and miss a payment, which is bad news. Refinancing could consolidate multiple student loans into one student loan, making it easier to stay on top of your debt. If you can get better terms, like a lower interest rate, that's good news, too.

How's your financial situation?

If you got a great job right out of college, your financial situation could have improved dramatically since you took out your loan. That means you could qualify for lower interest rates than you did originally — which means refinancing your loan could save you money over time. Check out your credit score (700 and up is usually considered good) and then talk to lenders to see if you can get a better deal than you have now. Even if you don't need lower payments, it's worth investigating refinancing because it has the potential to save you thousands of dollars —  and the sooner you refinance the more you'll save. You just won't know until you check out your refinancing options.

Can you get someone to cosign?

If your financial situation isn’t great, finding cosigner with excellent credit can help out. A parent or spouse who’s willing to sign onto the loan get you better rates, so you can save on your student loan. However, not everyone will be willing to take the risk of cosigning, as a cosigner is responsible for the debt if you don’t pay your bills. If your credit isn’t great, it’s worth trying to find a cosigner — but don’t be surprised if even close friends and family turn you down.

Do you plan to use federal forgiveness programs?

Federal loans offer forgiveness programs that wipe out your debt — at least any debt on federal loans — after ten years if you've worked in certain public service sectors. For those in military, government, teaching or non-profit jobs, this can be a tempting offer. However, if you refinance, you won't be able to take advantage of these federal programs (or any other benefits your federal loan may offer). Decide beforehand whether debt forgiveness might be for you: if it is, you'll have to stick with your original loan.

Consider refinancing with PenFed

If refinancing is right for you, consider refinancing your student loans with PenFed. We offer low rates as low as % APR on fixed rate student loan refinance products. We can give you an estimate on your refinance rate in minutes — all you need to do is answer four simple questions. Whether you're looking for lower payments or you're trying to get out of debt sooner, we can help.

Apply today!


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