Some students choose to refinance student loans to reduce their student debt and monthly loan payments. Students can refinance their loans through various ways, such as consolidation.

Students should consider several things before refinancing student loans. For example, federal and private loans should be refinanced separately. Federal loans have lower interest rates than do private loans because government lenders know that students’ incomes will increase as they continue their educations. Consolidating federal loans with private loans when refinancing will raise interest rates more so than if the loans were refinanced separately.

Students should have good credit scores before they refinance student loans. Bad credit scores will affect interest rates for refinanced loans. Before refinancing, students should review their credit reports and try to fix any problems. After they have fixed any problems with their credit scores, students should request quotes from different lenders to determine which lender would offer the best interest rates for the refinanced loans. Interest rates tend to change around July 1 every year, and though interest rates are currently low, changes in the economy can cause sudden changes in interest rates.

Different lenders have different qualifications to refinance student loans. Most lenders do not allow the refinancing of loans that are currently paying for education. Some lenders require minimum balances of varying amounts to qualify for refinancing. Students should research these qualifications before refinancing.

Refinancing can either lower interest rates and monthly payments on student loans or redistribute the payments over longer periods. Lowering interest rates prevents long-term payment increases, and lowering monthly payments decreases short-term payments. Redistributing the payments over longer periods of time makes each payment more manageable but increases the overall balance of the loans because of interest.