In America, one of the biggest stressors and problems that millennials and young people face is the pressure of student loans. There are trillions of dollars in student loans that are waiting to be paid off, but unfortunately, it’s not always easy to pay off loans in time before interest starts to rack up. Plus, the Biden administration’s freeze on student loan repayment is set to end on June 30, 2023, leaving many borrowers scrambling to find a way to reduce their interest rates.
While earning high education degrees is usually a path people take to try and guarantee them bigger and better career opportunities, it can also come at a cost—a very high price tag. Learn everything you need to know about loan refinancing here to help prepare for the end of the student loan repayment freeze.
More than 43 million Americans carry student loan debt, and for many, it can take decades to pay off. And for many of those millions of students who have higher interest rates, it can take a very long time to make any noticeable difference in your principal balance. Even with the Biden administration’s recent pause on student loan repayment, many borrowers still face a mountain of debt once this pause is lifted.
However, one option these millions of Americans have to help pay off their loans once repayment resumes is to do a student loan refinance. To refinance private student loans, the borrower can get a lower interest rate on their outstanding loan, which in turn will reduce the monthly payments they must pay each month, saving a lot of money over time.
This is how a student loan refinance quote works: To refinance your student loan, you have to trade in your existing loan for a new loan. This happens by approaching a bank or another type of lender, like one of the best student loan refinance companies out there, who offer to pay off your loan for you with your current lender. Then, once the loan is paid off, you will pay the new lender off each month, except with a lower monthly interest rate than the last lender you had.
There are differences, however, with different kinds of loans in how your loan will be refinanced. For example, average interest rates with refinanced loans vary very widely depending on the type of loan you want refinanced, how much of the original loan is left to pay off—meaning how much the new lender will have to pay upfront to help you refinance it, and more.
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