Dori Zinn, personal finance journalist at Credible gives her advice on the benefits refinancing an MBA student loan can bring you.
Helpful for: MBA Applicants
Read Time: 5 minutes
- The average debt for a grad student in the U.S. is $66,300.
- To refinance a loan, means that you are replacing your previous loan with a new one along with new set of terms and conditions.
- Refinancing your student loan could lower your interest rate. This means that potentially you could end up having to owe back less money to your lender.
- Your monthly payment could be decreased. Keep in mind, that being able to make your monthly payments on time contributes to a good credit score. If your monthly payment requirements are lowered, it will make paying on time easier.
- If you’ve taken loans from different lenders, refinancing can combine them all into one for your convenience.
- To qualify for refinancing, your lender will first review your credit score and credit history. The higher your credit score is, the lower your interest rate will be and the higher your chances for qualifying for a loan. If your credit history is not looking great, take some time to pay off some other credit card debts and make any unpaid payments.
- The next step to qualify for financing, is income assessment. You will need to prove that you can pay your loan back. You should know that lenders will be looking at your salary, to make sure that you’ll be able to make payments on time.
- Finally, you will need a cosigner to prove your credibility. The cosigner will be responsible for the loan in the event that you are no longer able to make payments.
- Don’t make any rushed decisions when planning how to pay your student debt. Zinn comments:
If you refinance or consolidate your student loans, you can significantly cut down the cost of your repayment. But before you start the student loan refinance application process, make sure you’re a good candidate. Make sure you qualify, can afford the loan payments, and are getting the best deal around by comparing student loan refinancing companies.
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