FINANCIALLY SPEAKING

“Apply for grants and scholarships, no matter how small. This will reduce the amount that you will need to borrow.”

2. Fill out the Free Application for Federal Student Aid (FAFSA) form, which gathers info about your finances. Both the US Government and your school will use this to determine your need for financial aid. You will need to complete this at the beginning of every calendar year (fill out to the best of your ability) – you can go and update any estimates later.

3. Apply for aid with your school’s financial aid office and through any other sources. If approved, you might need to complete an introductory entrance counseling session to learn how your loans will work.

4. For private loans, find a lender that meets your needs and apply for a loan with that institution.

5. Understand the terms of the loan and when you will need to start repaying them. Even though you might not be paying back immediately, it is important to know when your payments will be due.

Some loan programs work to help make repayment more manageable. Private lenders have flexible terms as well. With some loans, you don’t have to start making payments until you are out of school, allowing you to focus on your studies. Some loan programs (especially federal student loans), offer unemployment deferment, or adjust the amount of your monthly payment when money is tight. If you sign up for income-driven repayment plans, you can avoid the need to make payments that you cannot really afford. The interest that you pay on student loans may help reduce your taxes.

THE WISE BORROWER

Student loans can be the ticket to a brighter future but can also be a serious burden.

The more you borrow, the more you will have to repay. Whether you are a parent who is taking out a loan, or the student taking out a loan for him/herself, imagine what life will be like when you are repaying the loan.

Apply for grants and scholarships, no matter how small. This will reduce the amount that you will need to borrow.

Students can work part-time to pay some of their education costs. In addition to generating some income, it can also gain you valuable experience that some of their peers won’t have until after graduation.

Check out less expensive schools and in-state education. After graduation, how much will it matter where your child went to school? The first couple of years are sometimes taken up with core courses that can be taken at any accredited college.

Cut costs when you can: used books, inexpensive entertainment, etc.

Remember that every time you accept funds from a student loan, you will have to repay it all (plus interest) at some point in the future.

REFINANCING STUDENT LOANS

Like many Americans, you may still have student loans on which you are making monthly payments. There’s a lot in the news right now about student loan pauses and forgiveness and if you do still have outstanding student debts, it’s important to keep abreast of the current situation as it may affect you. But here are some tips if you are considering refinancing your student loan.

When you refinance a student loan, you (as the borrower) take out a new loan to pay off your existing loan in take advantage of a lower interest rate or more beneficial repayment plan to save money.

If you or your child has student loan debt, you either have a federal loan, or a private loan. It’s estimated that 90% of student loan debt held is for federal loans.

Some people can save thousands when refinancing, but before you do so, you should ask yourself these two questions:

Should I refinance my federal student loans?

Although it may mean that you can get a lower interest rate, you should do your homework when it comes to refinancing your federal loans into private loans. Federal loans already have lower interest rates and more regulation than private ones. Once a federal loan becomes private (which it does when you refinance), most of the protections, including potential loan forgiveness, loan discharge, and income-based repayment plans, are no longer valid. Also, those loans can never revert to being federal loans again.

But, if you have a high-interest loan and you qualify for a lower interest rate, refinancing can save you money.

“Some loan programs work to help make repayment more manageable. Private lenders have flexible terms as well. ”

At the end of the day, if you have a steady income and can keep up with the monthly payments, refinancing can make good sense. If you like the incomebased repayment options available on a federal loan, want the opportunity for public service loan forgiveness, or you are benefiting from COVID-related forbearance protections, refinancing might not be the best answer for you. If you think that refinancing your federal student loan is the best choice for you, Mark Kantrowitz, author of How to Appeal for More College Financial Aid advises waiting until November’s midterm elections to refinance. “If student loan forgiveness passes, it will be prior to the midterms, so refinancing now will negate forgiveness eligibility.”

Should I refinance private student loans?

This is simpler because your loans are already private. Shop around - if you find a lender with better rates and terms, refinancing could make sense and save you thousands of dollars over the life of the loan. If you have a private loan, Kantrowitz advocates for refinancing to a fixed-rate loan before interest rates rise. having problems making payments, lenders might be wary of signing you up for a new one. If your credit is poor, talk to your lender about adjusting your payment plan and continue working on improving your credit.

Your income

Your income level shows lenders that you earn enough money to repay your loans and keep up your payments. Lenders will look at your income, the income of your co-signer (if applicable) and your

DTI (total monthly debt payments divided by your total gross monthly income). A DTI ratio represents the debt you have compared to the amount of money you earn. A high DTI may be a red flag to lenders. terms mean lower monthly payments, but more interest over the life of the loan. Avoid repayment terms of more than 10 years.

Prequalification

Many lenders may offer the option to prequalify, allowing you to see what potential interest rates and monthly payments will look like. Based on the change from your current loan terms, you can decide if refinancing makes sense for you. However, prequalification does not guarantee loan approval or specific rates.

Consider a co-signer

Refinancing lenders may give you the option of adding a co-signer – or conversely, to release one. If you don’t have longstanding credit history, you may need someone with good credit to co-sign your loan. Co-signers are taking on the responsibility of your loan too, and they will be required to make payments if you are unable to do so. Keep in mind that your repayment history will impact their credit score. Conversely, to release a current co-signer, you can refinance a student loan in your name alone. Make sure you meet the credit and payment criteria.

Before you refinance, you should take into consideration the following:

Credit Score

To qualify for a lower interest rate then your current loan, you need a good credit score. A FICO score of at least 670 is considered “good.” If you’re currently

Competitive rates and terms

Compare lenders to make sure that you are getting the best rates and terms. Consider monthly loan repayments, total repayment terms, and interest rates. Choose a plan that works for you and offers the highest monthly payment you can afford. Longer repayment The Summit Federal Credit Union offers its members a new, broad scope of private student lending solutions, focused on innovative solutions, personalized service, and financial education. Click here for more information.