Figuring out the ins and outs of student loan refinancing can be difficult. Sometimes, it may even feel like you need a finance professional on speed-dial when you’re beginning to learn how everything works. Fortunately, with an ELFI Student Loan Advisor, you have exactly that.
The ELFI loan team is trained to help students and graduates understand the refinancing process, as well as to help determine a plan so you can pay off your student loans quickly. As a bonus, being matched with a specific loan advisor means he or she can keep track of any student loan refinancing questions, financial situations or payment goals that may impact your long-term refinancing strategy. There’s no need to re-explain to a new advisor each time. Instead, you and your Student Loan Advisor can develop a plan to meet your specific needs.
Here are a few things to consider discussing with your advisor:
What Is a Loan Repayment Term?
A student loan repayment term is the length of time it will take to repay your loan, for example, you could opt for a 5- or 10-year repayment term. You’ll have the opportunity to make this choice when you start the refinancing process, and your ELFI Student Loan Advisor can help you determine which will be the best fit for you.
Here are a few considerations when choosing your student loan repayment term:
Long-term loans, for example, 10 years, often have smaller monthly payments because you have a greater amount of time to pay them off. The downside of long-term loans is that they accrue more interest than short-term loans over time. If you’re borrowing a large amount or want to maintain a lower monthly payment, a longer repayment term might be a good fit for you.
Short-term loans, on the other hand, can be paid off much more rapidly, but tend to have larger monthly payments. If you have the financial flexibility to make these larger payments, or if you have a relatively small loan, this is a great way to knock out your loans quickly and avoid paying additional interest.
What Are Variable and Fixed Interest Rates, and How Do They Work?
Your Student Loan Advisor can also help you understand your fixed or variable interest rate, so you know what to expect from your monthly student loan payments.
Fixed interest means your rate will remain the same for the entire life of the loan. The initial interest rates on these loans often begin higher than variable rate loans, but the benefit is there’s no chance of a fixed interest rate increasing. These are a great choice if you prefer predictable monthly payments, or if you’re planning to pay your loans back over a long period of time.
Variable interest rate loans are the opposite. With this type of loan, your interest rate may change over time, based on the London Interbank Offered Rate (LIBOR). Your loan advisor might encourage you to consider this type of loan if variable rates are currently on a down-swing and you plan to pay off your loans quickly.
Can I Consolidate Federal and Private Student Loans?
Your ELFI Student Loan Advisor can also explain the difference between private and federal student loans, as well as what will happen when you consolidate them.
When you refinance your student loans, you may have a variety of private and federal loans with several different interest rates. Consolidating wipes the slate clean by rolling all your loans into one monthly payment with your choice of a fixed or variable interest rate.
Consolidating your student loans can be a smart move because it often means a lower interest rate for your monthly payments and makes your loan progress easier to track. The downside of consolidating federal loans is that you may lose any benefits currently associated with them, including deferments and income-driven payments.
Working with your student loan advisor, you can determine whether consolidating your loans is the right choice for your financial situation.
Do You Offer Any Special Benefits or Programs?
If you’re already an ELFI customer and love working with our Student Loan Advisors, then be rewarded for telling your friends! Register through our online form, share your personalized referral link and receive $400* when a friend refinances their student loans with ELFI.
Working with a dedicated Student Loan Advisor can make all the difference when it comes to having a great refinancing experience.
If you’d like to learn more, check out our blog “What’s so Great About an ELFI Student Loan Advisor?” for even more reasons you’ll love working with our loan team.
