When could refinancing your student loan(s) be worth it?
Refinancing may lower your monthly payment, so if you need more money to pay bills each month, it may be a good idea. Even if you don’t need the extra cash but are able to lower your interest rate, you can keep your payment the same and you’ll repay your loan more quickly. There is a calculator on BND’s website that can help you as a North Dakota resident determine if refinancing is to your benefit. Be aware that refinancing federal student loans into a private loan means you won’t qualify for federal forgiveness programs.Borrowers typically choose to refinance for one of two reasons (or both!):
How does refinancing student loans work? What do I need to do?
Bank of North Dakota’s student loan refinance program allows North Dakota residents to refinance all of their student loans, including federal student loans, into one new loan with one monthly payment. Click here for more details and to learn about the steps for getting a loan.
Can refinanced student loans be forgiven?
If you refinance your federal student loans through a private lender like Bank of North Dakota, those loans are not eligible for any federal loan benefits including the forgiveness programs. Before choosing to refinance, you should contact your lender or servicer to see what benefits for which you may be eligible.
Private student loan lenders may offer loan forgiveness in specific situations. Before refinancing, check with the lender on the benefits they offer.
How will refinancing affect my credit score?
Everyone’s situation is different. Many credit score models account for the length of credit history. If you have several older student loan accounts, closing those accounts through refinance, could change the average age of credit lines. This could have a temporary impact on your credit score. However, many lenders look at your debt-to-income ratio, and refinancing may improve yours.
To get a glimpse of how refinancing your loans may impact your score, you could use a credit score simulator. You can find simulators on some of the consumer reporting agency websites, like Transunion, and through some credit card apps.
Why wouldn’t I be able to refinance my student loans?
You may not be able to refinance your loans if you are still in school, do not meet the credit criteria or have previously defaulted on student loans. If you tried to refinance your loans before and were unable to for one of these reasons, you may want to reapply if your situation has changed.