Student loan refinancing in 2022: How to do it, and what you should know first
It’s never been a better time to think about refinancing your student loans. With interest rates at record lows, refinancing can be a smart move for many student borrowers—assuming they’ve taken everything into consideration. There are currently more than 43 million people with student loan debt in the U.S., and borrowers carry an average balance of more than $39,351.
As a result, tens of millions of people stand to potentially save some money by refinancing their loans at lower interest rates—particularly with student loan payments resuming in February after a two-year freeze. Here’s what to keep in mind before shopping around for a new rate.
Important things to consider before refinancing your student loans in 2022
The first thing to know about refinancing your student loans in 2022 is that the timing is perfect in terms of interest rates. “Variable rates have nowhere to go but up,” says Mark Kantrowitz, a student loan expert who has written five books about scholarships and financial aid. “Borrowers may want to refinance because the interest rates are at or near historic lows. You can potentially get a lower rate, especially if your rates are much higher from a few years ago.”
Second, borrowers who were enjoying a brief holiday from making loan payments due to the pandemic should prepare to start paying once again. That’s because the Biden administration has confirmed that the pause will end at the end of January.
The third ball in the air is the prospect of some sort of student loan forgiveness action coming down from on high. Read more
What should I know before I start the loan consolidation process?
- Guaranteed Student Loans
- National Direct Student Loans
- National Defense Student Loans
- Parent Loans for Undergraduate Students
- Auxiliary Loans to Assist Students
There is one federal loan that does not qualify for the Direct Consolidation Loan program—the Direct payday loans Arkansas PLUS Loan for parents. This cannot be combined with federal loans taken out by the student to be included in a consolidated loan.
Your federal loans are eligible for consolidation after graduation, after you leave school, or once you drop below half-time enrollment. In order to be considered for participation in the federal loan consolidation program, your loans must be in repayment or still be under the six-month grace period.
Your Direct Consolidation Loan will have a fixed interest rate for the entire life of the loan. Read more
