Welcome to NerdWallet’s SmartMoney podcast, where we answer your real-world money questions — in 15 minutes or less.
This week’s question is from Valerie. She says: “I’m paying down over $40,000 in student loans. The monthly payments are doable, but definitely squeeze my budget. I’ve been wondering if it makes sense to refinance the loans — and if I’ll even qualify.”
You’re a good candidate for student loan refi if you have private student loans and will save money by refinancing. If you have federal loans, you’d give up unique protections by refinancing, so refi only if you’re comfortable giving up those protections and it will save you money.
To qualify for the best student loan refinance deals, you or a co-signer will likely need a credit score at least in the high 600s.
Refinance to reduce your interest payment or shorten the loan term — not the monthly payment. A refi loan with a lower monthly payment but a longer loan term or higher interest rate isn’t actually saving you money.
Not a good candidate for refinancing, but need lower payments? For private loans, call your lender and see what options they have, such as student loan deferment or forbearance. For federal loans, look into income-driven repayment plans. Just keep in mind these options can increase the amount you repay overall.
How much could refinancing save you?
More about refinancing student loans on NerdWallet
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