Student Loan Consolidation and Refinancing BenefitsEmail This Article
Let's face it, life after graduation can get very expensive. Living expenses like housing, car payments, and relocation costs can be overwhelming when student loan bills are added on top of your existing financial obligations.
Student loan consolidation or refinancing can help you manage your budget. You'll save the frustration of dealing with multiple lenders and reduce the risk of missing a payment because refinancing combines your loans into a single loan, with a single bill.
How you can benefit from student loan refinancing:
- Take some pressure off your budget with a lower monthly payment
Those first student loans bills can swallow your income quickly, especially when you’re just getting started in your career. A lower, more affordable monthly payment can help you stay current and avoid default. Plus, you can use the savings to pay off high-interest debts, like credit cards, and to build an emergency expense fund.
- Cut your long-term costs by paying off your loan early with no penalties for early repayment
When you refinance your student loans, your repayment term is typically extended, which means it will take longer to pay off the loan and you may pay more interest. You can avoid some of these costs by making extra payments or larger payments. Just make sure to let your loan servicer know that you want to apply the extra funds to the principal balance.
- Simplify your finances with a single monthly student loan bill and a single lender
Many students take out several types of loans to pay for college. You might leave college with loans from the federal government, your college and a few different private lenders. Keeping track of multiple due dates and payments can be tough. Consolidating or refinancing combines your loans, making the repayment process much easier.
- Save on your federal income taxes by deducting the interest on your consolidation or refinance loan
If you qualify, the interest on your Direct Consolidation Loan and private refinance loan is deductible on your federal income taxes.
(Don’t forget to review the full list of available education tax benefits, so you don’t miss out on any other tax credits and deductions.)
Want to find out how much your monthly payment will be after you refinance? Use our student loan consolidation calculator to find your monthly payment savings!