College Student loans refinancing

College loan refinancing may be an option if you’re having difficulty making ends meet or if you’d just like to have a little extra money in your pocket every month. Juggling several student loans and paying some of those high interest rates can be tough, but if you consolidate those loans into just one payment, you can make your financial life a lot easier.

Student loans are an excellent way to pay your way through school but many people are finding it hard to meet their loan payments in these economically difficult times. The job market is slow and finding employment in a chosen career may not be easy, leaving some to take jobs that pay lower than what they had hoped for. College loan refinancing offers people the time they need to get their lives on track by extending the life of the loan, sometimes by as much as 20 years and making the monthly payments much lower.

College Loan Refinancing – Private versus Federal

Private student loans differ from federal loans in that private loans are just like any other personal loan and you will need a fairly good credit score if you want to refinance your loans. So request a copy of your credit report and take the time to clean up any problems that you find before applying for college loan refinancing. You’ll have a much better chance of being approved and getting a low fixed interest rate.

Despite the economic times, it is not impossible to secure a college loan with bad credit. While it is not as easy as it used to be to receive student loans, lending institutions have put tools in place to help students with low credit ratings. A low credit rating is a FICO score of less than 650. Due to the fact that many college students are new to paying their own bills, or may not be as reliable when it comes to bill payment as older students, they typically start off with low credit ratings.

How a college loan can be obtained:

The easiest way to secure a college loan with bad credit is by finding a cosigner with excellent credit. While this will help in the short term, the key is to match the cosigner with a program that many lenders currently provide. Student borrowers are allowed to cut their cosigners loose after making a set number of consecutive on-time payments. The magic number is typically 24. This allows borrowers to keep the low interest rate from the cosigner, while establishing a credit history of their own.

Students are awarded financial aid based on financial need, not credit history. Thus, if need can be established, borrowers should be able to secure college loans.

Students with good grades may be able to find lenders willing to overlook their poor credit rating and provide them a loan. However, in situations such as these, lenders may still 'punish' borrowers by offering them a higher loan rate.

Large banks and federal programs are not the only lenders available. Local banks and credit unions can award student loans to borrowers. Loans from smaller companies are often easier to obtain, especially if bank personnel knows the applicant through an on-going banking relationship.

Sometimes all it takes to get the loan is a little candid explanation. If the borrower were sick for an extended period and was unable to work, the loan officer may be willing to forgive the bad credit notations on the file.

Securing a college loan with bad credit is completely possible. All it takes is honesty, persistence and a whole lot of tenacity.

Most federal student loans, on the other hand, do not take credit scores into account when refinancing, since the loans are guaranteed by the government. Refinancing can reduce payments by as much as 50%and a new option also allows for income-based payments. Federal student loans also come with built in safeguards that benefit the borrower allowing them, in some instances, to suspend payments or even to have the loans canceled all together.

Is College Loan Refinancing Right for You?

They must be returning to school as an undergraduate, graduate, or post graduate student, for a minimum of half-time study. The lender will contact the school for documentation.

They must be called to active military duty in the case of a war, or emergency national duty.

Borrowers must be unable to locate full-time employment. Full-time employment is determined as less than 30 hours per week. Depending on the length of the deferment, borrowers may have to supply proof of their job search.

Demonstrated economic hardship must result from the amount of money for the loan payment being removed from the monthly household budget.

College loan refinancing may not be for everyone. You need to look at the types of loans you have, your current interest rates as well as what fees and penalties you’ll have to pay if you do refinance. If you had a co-signer when you took out the original, they may also need to co-sign the new loan unless you can have them removed. Take some time to weigh your options and choose a refinancing plan that’s right for you.