When to Refinance Your Student Loans

To decide when to refinance your student loan we first have to work out whether you should finance. Fortunately, the decision here isn’t difficult. There are advantages to refinancing and consolidation and there don’t appear to be any disadvantages. One of those free lunches that we are always told do not exist. So the decision really does become when to refinance your student loans instead of whether you should.

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When you’ve made the decision to refinance your student loans, and gone through the process itself, you should end up with one single loan (the technical term is consolidation) which is of course much easier to keep track of. You may also find that the various deferments possible on such loans which might have run out on your previous, individual loans, will be reinstated. So that’s two good reasons but the third is perhaps the most important. Most student loans are on adjustable interest rates. This means that if general market interest rates rise then so will your future repayments. A refinancing of your student loans turns those adjustable rates into a fixed interest rate.

So the answer to the question “when to refinance your student loans” in fact becomes the one “are interest rates going to go up?” If interest rates go up then so will your repayments without refinancing: if you have a fixed rate loan they won’t. Are interest rates going to go up in the future? Given the current housing boom it’s almost certain that they will so in fact, “when to refinance your student loans?” has a single word answer. Now.