Refinance student loans can be a great option for consolidating your college debt. If you are like many graduates, you probably have some outstanding student loans that have ballooned in terms of interest. These are definitely not in the same category as the “good” student loans that are paid back over time. It is very important to remember that consolidation of these loans will mean paying back the original amounts at a higher rate of interest. Here are some tips for making your student loan refinance a little more affordable.
There are two primary reasons why you may be able to qualify for a refinance student loans tax deductible. First, you may have entered into a grace period during which time you have not defaulted on your college loans. The federal government recognizes this and allows you to stretch out the period until such time as you have fully repaid the original amount owed. Usually the grace period extends up to 18 months or so but you should contact your lender as soon as possible to see if you qualify.
Another reason why you may be eligible to deduct the interest on your student loans is if you are in the process of obtaining a Student Loan Refinancing. Typically you must be enrolled in school at least part time in order to consolidate. If you are still in school, you can still consolidate but you will be held to a minimum payment for a longer period of time. This means that you will not only be stretching out the repayment time, you will also be making much lower monthly payments as a result. If you have bad credit, though, you may have to settle for higher monthly payments if you want to use the second option to consolidate your loans. A Bad credit refinance will require that you first obtain a secured loan in order to consolidate, and then you will need to apply for a bad credit loan to repay the consolidation.
If you currently have student loans, there is another choice that you have. You may be able to qualify to deduct the interest on them by taking the money you put aside each year and using it to pay off all of your debts. Most colleges offer a consolidation program that will allow you to combine your federal debt into one easy monthly payment. While it is recommended that you consolidate if you are still in school, you do not have to if you are not. You are still able to consolidate if you are in college and are paying on a parents loan or other such loan.
The third option available to you is to refinance all or some of your college debt. While it is not wise to consolidate just any debt, many students feel that it is better to have one monthly payment than several different ones. Also, if you refinance to combine both government and private loans into one, you will only have one date to deal with. With all the paper work involved with consolidating college loans, many students choose to go ahead without it. However, this can actually hurt you in the long run as your credit score will suffer if you have too many inquiries on your credit report.
Many people choose to go the fourth option available to them and this is to consolidate both federal and private education loans. If you have both subsidized and unsubsidized education loans, you will have to choose which one to consolidate first. You will then take the money you were able to save from defaulted student loan repayment and use it to pay off your current education loan debts. This is good for you as well as your credit, so if you were a candidate for a refinance because of defaulted student loan repayment, this may be the option for you.
You can also consolidate private student loans through an agency such as Sallie Mae. They will combine your federal education loan repayments and roll them into a single loan. You will then be required to make one monthly payment to Sallie Mae for all of your private education loans. This is good for two reasons; one you will save money by being able to focus on your debt consolidation and two you will have peace of mind knowing that your federal loans are being paid off. Many people choose to consolidate private student loans as this helps them keep their credit rating in good standing.
Another way to consolidate your student loans is to use a debt consolidation program. This will allow you to combine your federal education loan debt into one loan with a lower interest rate. These programs are specially designed for people who have bad credit and want to get out of debt as quickly as possible. However, you must qualify for this type of program in order to consolidate your student loans tax deductible. When applying for a debt consolidation loan, make sure you understand all of the loan terms and conditions including the tax benefit. Also, be sure that you do not sign any document or agree to any finance charges until you are absolutely sure you understand how much money will be going to pay off your debt.