Whether you needed to drop out of college because of family demands or because you were unhappy with your selected major, you’re part of a large group of people. The “some college, no credential” (SCNC) population has increased, reaching 36.8 million.
Returning to college to complete your degree could help your earning potential and employment prospects. However, you may be worried about what to do with your student loans. If you’re thinking about going back to college, here’s what you should know about your student loan options.
Managing Your Student Loans
If you’re wondering how to go back to college at 30 or older, you should know that’s very doable. In fact, a study from New America found that about 25% of undergraduate students are 30 or older.
Returning to college can be slightly more complicated if you have student loans. If you have outstanding education debt, there are two main ways to handle it to return to school: deferring your loans or refinancing them.
Deferment
A deferment allows you to postpone your payments until after you have completed your education. On most loan types, interest will continue to accrue during the deferment period, but you won’t have to worry about making payments until after you graduate.
With federal student loans, you can qualify for an in-school deferment as long as you’re enrolled half-time.
If you have private student loans, some lenders — but not all — offer in-school deferments. If you aren’t sure if you qualify, contact your lenders to ask what their policy is for students returning to college.
Student Loan Refinancing
If you have private student loans and your lender doesn’t offer an in-school deferment, another option is to refinance your debt. You could potentially refinance your loans to lengthen the loan term or qualify for a lower rate and reduce your monthly payments. The lower payment amount will make your loans more manageable while you pursue your degree.
Student Loan Refinancing to Go Back to School
Student loan refinancing can be an attractive option if you’re returning to college. With this approach, you apply for a new loan to pay off your existing debt. You may qualify for completely different terms than you have now, and you can consolidate your loans into one easy-to-manage account.
However, there are several key questions you should ask yourself before refinancing your debt:
Did you complete your degree?
Can you go back to college after graduating? Absolutely, but refinancing your student loans to do so will be much easier if you completed your bachelor’s program and are returning to school to earn a higher degree or credential. Most student loan refinancing lenders require borrowers to have earned at least a bachelor’s degree to qualify for a loan; if you dropped out of school before completing your degree, you may not be eligible.
There are some lenders that will work with borrowers who didn’t graduate, but you’ll have fewer options, so you may not qualify for the lowest rates or the best terms.
What kind of credit do you have?
In general, student loan refinancing companies want borrowers who have good to excellent credit. If you have poor to fair credit — or no credit history at all — you may find it difficult to refinance your loans. However, there may be a workaround; if you have a parent, spouse, relative or close friend with good credit who is willing to co-sign your loan application, you may be eligible for student loan refinancing.
You can check your credit report for free at AnnualCreditReport.com. However, your credit score isn’t provided. Instead, you may be able to view your credit score through your bank or credit card provider.
Are you employed?
To refinance your loans, you typically need to meet lenders’ income requirements. For example, ELFI requires borrowers to have incomes of $35,000 or higher to qualify for a loan. If you aren’t employed because you plan on returning to college and don’t have another source of income, you won’t be eligible for a loan. However, you could add a creditworthy co-signer with a reliable source of income to your application, which would increase your likelihood of getting a loan.
Are you sure you won’t need federal loan benefits?
Refinancing can be appealing because you could potentially lower your interest rates. However, you should think twice before refinancing federal student loans. Refinancing federal debt transfers your loans to a private lender, and you’ll lose eligibility for perks like federal deferments and income-driven repayment (IDR) plans.
Only refinance your loans if you’re sure you won’t need those federal perks and feel that the benefits of refinancing outweigh the risks.
Refinancing Your Student Loan Debt
Refinancing your student loans is one way to make going back to college easier. You could qualify for a loan with lower rates and a longer term to reduce your payments so you can afford your education.
You can check your loan eligibility and view your potential loan rates through ELFI. ELFI offers loan terms as long as 20 years with competitive rates.
