The private student loan market is opening up with the first real chance of offering refinances, or consolidation as it's commonly called, that I've seen in about 10 years.
3 ways to refinance private student loans
Earlier this year, The Cleveland Plain Dealer reported a company called Charter One has been advertising an Education Refinance Loan with fixed rates as low as 4.74% and a variable rate of 2.31% above the one-month LIBOR rate.
Those low rates are contigent on two things: A good credit score and a co-signer. So this offer is of no help if you're falling behind on debts and your credit is shot.
You can refinance anywhere from $10,000 to $170,000 in private student loans with 15 or 20-year repayment options. Federal student loans are *not* eligible for this refi offer.
Private student loans should still be avoided at all costs. But this option may help you if you're already stuck in one.
Now there's also a new option for refinancing your private student loans from a consortium of credit unions. Visit CUStudentLoans.com and see what's available. You may save a substantial amount of interest.
A third option would be SoFi.com. They claim to be the largest provider of student loan refinancing, allowing you to refinance both private and federal student loans.
My rules for student loan borrowing
When borrowing for college, be sure to max out whatever federal loans you're offered. Should your college expenses exceed your level of federal loans, consider going to a cheaper school, picking up extra work, or whatever else you have to do to avoid private student loans at all cost!
Additionally, your total borrowing for a 4-year degree should never exceed your expected first year's earnings after you start working in your field.
Finally, I always recommend that you start your degree out at a community college and then transfer to a "name school" where you plan to get your degree. You can effectively cut the cost of a college education in half by doing it that way.
For further reading:
- The 10 worst-paying college degrees
- College degrees that pay the most
- A master's degree for $6,600?!