Refinancing is often an option that many consider for their student loans. By doing this, you replace your old loan with a new one. The main benefits include simplifying debt and potentially lowering monthly payments.
One of the many things people hesitate on is the possibility of refinancing their Great Lakes student loans. There are a couple of options you can take:
Private Refinancing
Most private lenders offer options to refinance your student loan. They'll pay for your initial loans and create a new plan that essentially combines the debt you have. Refinancing through a private lender is a common occurrence. You may want to pursue it for these reasons:
- Consolidation: You can combine both federal and private loans into one payment. It makes it easier to manage and pay the debt.
- Lowered interest: One of the advantages of refinancing is that it can lower the monthly interest rate. That way, you save money each month and have extra finances to pay off the loan. One of the ways to qualify for better rates is by having a good credit score or a cosigner.
- Flexible terms: You can change the term agreement of your new loan. For example, you may want to pay off the loan faster and opt for a shorter term. You can also extend it, so you pay a lower monthly amount.
One of the considerations you have to make is that you’ll lose access to federal programs. The biggest of which is income-based repayment and student loan forgiveness. It’s unlikely for a private lender to have something similar to them.
Federal Consolidation
An alternative one could take for their Great Lakes student loans is to consolidate. These loans fall under the Direct Consolidation Loan program. It can help borrowers simplify their debt with the support of the U.S. Department of Education. You may want to pursue this program for these reasons:
- Consolidation: You can combine many federal student loans. You only make one payment each month with a fixed interest rate. However, you cannot merge private loans.
- Option to change loan servicers: If you did not have a good experience with Great Lakes, you can change to a different loan servicer if you’d like.
- Flexible repayment: You can also choose a shorter or longer-term as you desire. It’s all up to your situation and preference.
The only downside of a federal consolidation is the possibility of a higher interest rate. It takes into account all your loans and uses the weighted average interest rate of each. Many experience a slight increase because of that. However, you still keep the ability to access federal programs in the future if you need them.
Final Thoughts
Whatever you choose, make sure to understand the terms of the new deal. For example, if you want to go for a private refinancing deal, don’t be afraid to compare lenders and what they offer. You want the best possible option to make the loan easy to manage.
