When you first took out student loans, your life was probably still a rough sketch. It’s taken shape since then.
Now, you likely have a steadier income, stronger credit, and a clearer picture of what your life looks like and what you want your money to do for you.
Refinancing student loans allows you a chance to revisit your rate, payments, and timeline. To see if it makes sense for you, start by considering how new terms would fit into your full financial picture.
Start with the Change You Want to Make
Before comparing offers, decide what you want to get out of refinancing your student loans. A clear goal gives you a practical way to evaluate rates and terms and choose the loan that best fits your financial plan.
You may want to:
- Lower your interest rate
- Reduce your monthly payment
- Combine several student loans into one
- Shorten your repayment timeline
- Create more room for savings and other financial goals
Choose the one or two outcomes that matter most to you right now, then use them to filter your options. A smaller payment may give your monthly budget more breathing room. A shorter repayment term may help you pay less interest over time.
Keep your priorities in focus so you can choose terms that support your broader financial goals.
Compare the Full Cost of Each Option
Your monthly payment is only one useful number. The full cost of the loan tells you a lot more.
Start by listing the balance, interest rate, and remaining term for each student loan you currently have. Then compare those details with potential refinancing options.
Pay close attention to:
- The annual percentage rate (APR)
- Whether the rate is fixed or variable
- The length of the new repayment period
- Your estimated monthly payment
- The total amount you would repay
- Any fees or available rate discounts
While a lower monthly payment can give you some welcome breathing room in your budget, it may come with a longer repayment term and more interest over time.
Don’t forget to include benefits attached to your current loan in the comparison, too. Refinancing federal loans through a private lender may end access to income-driven repayment plans, temporary payment relief, and certain forgiveness programs.
If you aren’t seeing the results you want from a refinance, choosing a cosigner may provide additional options. Adding someone as cosigner on your loan can open the door to more favorable lending terms; however, it’s important for both parties to recognize the significance that comes with sharing responsibility on a loan. Learn more about how a cosigner can influence your loan and how to choose the right cosigner below:
A good refinance rate improves on your current terms and supports your goal. Reviewing the full cost can help you understand what you may save today and throughout the length of the loan.
Test the New Payment Against Your Budget
Compare your current student loan payment with the estimated new one. See what remains after essential expenses, minimum debt payments, and savings.
Then decide what any difference would allow you to do. For example, an extra $75 a month could go toward:
- Building an emergency fund
- Paying down high-interest debt
- Increasing retirement contributions
- Making additional student loan payments
Include irregular expenses in your calculations, too. Car repairs, medical costs, annual insurance premiums, and other occasional bills still need room in your budget.
Also consider how the payment would feel during a tighter month, like July and August for teachers or January for retailers. Choose an amount you can sustain without regularly relying on credit cards or pulling money back out of savings.
Take the next steps with confidence
Your student loans helped make one chapter of your life possible. Refinancing may help you shape the next one.
Start by gathering your current loan details and visiting Chaffey FCU’s student loan refinancing page for more resources.
Still working toward your degree? Explore Chaffey FCU’s private student loan option for help covering your remaining education costs.