9/2/2023 0 Comments First republic auto loanThe Bottom LineĪt the end of the day, there's still a lot of uncertainty when it comes to federal student loans and whether forgiveness or other types of help will apply in the coming years. Also keep in mind that the lowest rates from private lenders are only offered to individuals with excellent credit, and that some borrowers still may not qualify. Of course, you'll want to compare student loan refinancing rates to the rates you're actually paying on federal student loans and not just what is offered on new federal loans issued right now. This compares favorably to rates currently being offered on PLUS loans for parents of undergraduate students and graduate or professional students, which is currently set at 8.05%. is currently advertising fixed-rate graduate school loans with rates as low as 4.42%. In some cases, it may be possible to get a lower interest rate with private lenders than you might be paying with federal student loans, especially PLUS loans. If you're a very high earner who feels strongly they would not qualify for federal student loan forgiveness even if it were to come into play, it can make sense to refinance student loans to get a better deal. When It Might Make Sense to RefinanceĪll these reasons aside, there are always exceptions to consider. If you think that could actually happen, this is yet another reason to wait. Considering the Supreme Court ruled that student loan forgiveness was beyond Biden's authority, it also seems incredibly unlikely to happen and more of a "vote grab" than anything.Įither way, refinancing federal student loans now means you would not qualify for forgiveness through the Higher Education Act of 1965, either. No one is sure right now how much federal student loan forgiveness would be offered if this were to work out somehow, or when it would come into play. In light of the original student loan forgiveness plan being shut down by the Supreme Court, Biden announced in late June that he would still try to forgive some amount of federal student loan debt through the Higher Education Act of 1965. The last reason not to refinance is a long shot but it's still worth considering. If you refinance your student loans into a private loan, you’ll become ineligible for many of these loan forgiveness programs. These include programs like Public Service Loan Forgiveness, Teacher Loan Forgiveness, and more. Third, there are many existing student loan forgiveness programs that apply to borrowers with federal loans. If you were to run into financial trouble, you also wouldn't be able to take advantage of the on-ramp period that lets you avoid loan delinquency if you miss federal student loan payments through September 30, 2024. If you were to refinance your federal loans now, this means you wouldn't qualify for the SAVE plan or any other income-driven plan. In fact, the press release for this program says those who miss monthly payments during this period "are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies." This program aims to help vulnerable borrowers stay on track even if they miss monthly payments. Separately, the Biden administration has announced a 12-month "on-ramp" to help troubled borrowers that will last from Octoto September 30, 2024. In the meantime, unpaid interest on the SAVE plan doesn't accrue, so borrowers who ultimately have their loans forgiven won't see their loan balances grow while on the plan.Īccording to a press release from the White House, all student borrowers will be eligible to enroll in the SAVE plan, and enrollment will be available before payments on federal student loans come due again later this year. Not only that, but borrowers on the SAVE plan who owe $12,000 or less can have their loan balances forgiven in 10 years instead of 20 years. According to the Biden administration, borrowers who opt for this plan who don't qualify for a $0 monthly payment should save at least $1,000 per year in student loan payments.
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