But that doesn’t mean all student borrowers should ditch everything and refinance now. Here are the borrowers who should rush to refinance and those who have reason to wait.
Rush: Private student loan borrowers with stable income
Those with private student loans do not have the ability to resist possible student loan cancellation. The best way to pay off these loans quickly and with the greatest discount is to lower your interest rate through refinancing.
And the best time to refinance your private student loans is whenever you can get a better rate than the one you already have. To qualify, you’ll need a stable income, a debt-to-equity ratio of 50% or better, and a credit score of at least 600. The better your credit profile, the higher the rate at which you can expect is low.
Typically, the available short-term refinance will also come with a lower rate, although this may mean a higher monthly payment. On the other hand, a lower interest rate with a longer loan term could get you a much lower monthly payment, but may mean higher total repayment costs.
Consider this: A borrower with student loan debt of $29,000 at 7% interest with a 10-year term will have payments of $337 per month and pay $11,405 in interest over the life of the loan.