A majority of college graduates today struggle with managing life and affording their student loan payments. Yet many fail to consider student loan refinancing as a way to reduce college loan interest, lower their monthly payment or get out of student loan debt sooner. The reason? Belief in four common myths about student loan refinancing.
Ask your son or daughter why they haven’t considered refinancing their college loans. If they respond with one of these myths, you can help set them on the right path:
Myth 1: After graduation, student loan payments are set until you pay them off.
Whether your son or daughter has federal or private student loans, there are a number of ways to make payments more affordable. Federal loans are eligible for income-based repayment plans, which can help ease the burden of monthly payments. Federal loans can also be consolidated into one loan through the federal government.
Both federal and private student loans can be combined and refinanced into one new loan with a lower interest rate. Not only does refinancing make monthly payments more affordable, but it can save thousands of dollars. For example, USC Credit Union members who refinance their student loans with USC Credit Union save an average of $14,752.
Myth 2: Refinancing student loans is only an option for those with high salaries or great credit scores.
Lenders will check to make sure you are employed and look at your credit score and how much total debt you have before refinancing your student loans. But every lender evaluates these components differently.
And if a low credit score or annual salary is a problem, a graduate can still successfully refinance student loans with a qualified cosigner. Here at USC Credit Union, you can request your cosigner to be released from a refinanced student loan after 36 months of on-time payments.
Myth 3: Refinancing college loans costs money.
Some debt-relief companies or official-sounding organizations make offers to negotiate loan forgiveness or settlement for a fee or will expect payment to complete refinancing paperwork. These organizations should be avoided. Refinancing student loans with a legitimate lender costs nothing.
Myth 4: The process of refinancing is a hassle and takes a long time.
Applying to refinance student loans can be done online, and only takes about 15 minutes. The lender will review the application quickly once it is submitted and may ask for some additional supporting documents that can be uploaded online.
Hearing back about approval is fast as well. At USC Credit Union, we let applicants know within one business day about approval. Applicants can accept the loan offer online with an electronic signature, and from then, it only takes one to two weeks until all the loans are refinanced.
What About Refinancing Parent PLUS loans?
If you took out a federal loan from the Department of Education’s Direct PLUS Loan program to help your son or daughter cover the gap in college costs, you can refinance your loans too. Refinancing your Federal Parent PLUS loan is easy and free to do. By refinancing, you can save on monthly payments or shorten your loan term, which can put retirement that much closer.
Easy Refinancing & Big Savings
At USC Credit Union, we make it easy and fast to refinance Parent PLUS loans or student loans. Not a member? Not a problem. If you live, work, worship or go to school in the city of Los Angeles or Orange County, you’re eligible for membership!