Refinancing education loans can be so simple and attractive that many borrowers tend to overlook some critical points about student loan refinancing. Sometimes what you don’t know can save you a great deal of money, time, and frustration. Below you’ll find a few little know facts that can save you big bucks when refinancing your education loans.
Consolidation Loans have a fixed interest rate versus a variable interest rate
Most education loans have a variable interest rate which can mean significant changes in the monthly payments if interest rates increase as they did on July 1st, 2006. With a fixed interest rate, the monthly payments and total payoff balance is a set amount. Some education loans such as the Perkins Loan and the HPSL (Health Professionals Student Loan) are fixed rate loans. Before consolidating it’s important to weigh the repayment benefits of rolling these kinds of loans into the consolidation.
Consolidation lenders vary significantly in terms of money-saving incentives
What separates one lender from another when it comes to consolidating education loans are the types of incentives each offers. Lender incentives can greatly reduce monthly payments and the total amount owed over the lifetime of the loan. Many lenders offer interest rate incentives for auto-debit payments and making on time payments. When shopping for a lender to consolidate your education loans, look for one that offers the best incentives.
Your loans must be current in order to consolidate education loans
If you’re behind on your loan payments, you’ll need to get caught up before refinancing. Once you refinance, you’ll most likely enjoy much lower monthly payments to ease your budget once you are caught up.
Private education loans and federal education loans cannot be combined when refinancing
While federal student loans are funds lent by the government, private student loans are those offered by independent lenders and tend to have a higher rate of interest. Those who have both types of education loans will need to secure 2 different consolidation loans. It’s best to consolidate federal education loans first and then start the process of consolidating your private education loans. You can however, consolidate federal subsidized and unsubsidized loans together. They do need to be tracked separately, but a quality lender will take care of this for you.
Your deferment and forbearance limits start over when you consolidate
One of the most important benefits of education loans is that they allow students to put their loans in to deferment or forbearance status during difficult times encountered while building their careers. When you refinance, you are essentially getting a whole new loan, meaning that your deferment and forbearance limits are reset.
Consolidating during the post graduation grace period allows you to lock in the lowest rate
Interest rates during the grace period (6 months after graduation) are .60% lower than after the grace period when loans move into repayment status. Consolidating before the grace period is over helps to lock in this much lower interest rate. It’s best to start the consolidation process soon after graduation to ensure that there is adequate processing time. You can specify that your new consolidated loan begin at the end of your grace period so that you may enjoy both benefits.
Borrowers can no longer reconsolidate student loans
For many years, borrowers have had the opportunity to reconsolidate their education loans if they were unhappy with their lender or found a better loan offer elsewhere. As part of the Federal government’s July 1st 2006 student loan changes, borrowers now face major restrictions when it comes to finding a new lender for already consolidated loans. Unless you plan to take out new loans that would allow you to reconsolidate, it pays to shop around and find a lender you are going to be happy with because you only have one opportunity to consolidate.
Refinancing education loans is one of the easiest ways to lower monthly bills and make paying back your college education affordable. Keeping these little known facts in mind can save you a great deal of money and make consolidating your education loans a smooth and simple process.
In some states to get a bachelor degree in education you need to simply take a certain number of education courses depending on what level of education you want to teach. Yes, there are levels. You just don’t get a degree and then apply for a job at any school. There is elementary education, which is K through 8. There is secondary education, which is K through 12. In some states, you can get a degree that is only for teaching high school kids. So the first thing you want to decide is what level of school you want to teach. You will then have to take certain education courses to fulfill those requirements.
Then, there are some states that totally throw a monkey wrench into this whole equation. In those states you can’t major in education. No, that’s not a misprint. You can’t get a bachelor degree in education. You have to get a degree in the specialty that you want to teach, such as math or history or science or whatever. What you then do is get what they call a minor in education so that you are certified to teach in a school. If it sounds confusing, imagine how confusing it is for the kids who want to become teachers.
Of course, in addition to the above, there are the other courses that you have to take in order to complete your bachelor degree. This also changes from state to state. For example, in the states where a person can major in education, the courses that the person has to take to fill out the rest of the curriculum are the subjects that the person wants to concentrate on while they are teaching. In other words, if a person wants to be a math teacher, even though they are majoring in education, they now have to take a certain number of math credits to get what they call “certified” by the state. And this changes from state to state. So make sure you find out how many credits you need for that math certification before you make your schedule.