Student debt is one of the massive problems for graduates. Many try to solve it with student loan refinancing. Besides, we explain how it works and the main difference between consolidation and refinancing.
How does refinancing work?
Refinancing of student loans means that you get a new private loan to cover your existing student loan. This means that you have a new loan, with different interest rates and payment conditions. You can save thousands of dollars if you get a better interest rate. For example, you have a loan with 5% interest rate when you find a 3% interest loan. The difference between only two percent will save you money. Use an interest calculator to see how much money it will save for your specific debt.
Is there a difference between refinancing and consolidation?
Although these two terms seem similar, they aren’t. The consolidation will unite your student loans into one loan. However, keep in mind that you can’t consolidate private student loans.
When you are already familiar with refinancing, it is time to review the cases in which you should refinance your student loan.