4 Common Student Loan Refinance Questions and Answers
At LendEDU, we get a lot of questions from users looking to refinance student loans. Student loan refinance is a relatively new concept and sometimes it is hard to understand. Most student loan borrowers are not even familiar with the concept of refinancing student loan debt. At LendEDU, we keep a log of common questions and we tally the frequency of each question we receive. In this article, we’d like to put answers to the four most common questions we receive from prospective student loan refinance borrowers.
Can you pick which loans you want to refinance?
These days, most student loan borrowers have multiple student loans to their name. The majority of student loan borrowers have federal student loans. And, if you are anything like me, you probably took out a new federal student loan each semester. Adding in private student loans to the mix makes it even messier.
When you refinance student loans you can pick which student loans you’d like to consolidate and refinance. Student loan refinancing isn’t all or none. For example, you can choose to refinance only your private student loans. Or, you can refinance only the loans with high interest rates.
Does the term length restart when I refinance?
When you refinance student loan debt you can select a new term length. For example, at DRB (Darien Rowayton Bank), term lengths range from 5, to 10, to 15, to 20 years. The choice is up to you!
Most student loan refinance candidates have already started repayment on their student loan debt and might be a couple years into repayment. There are a lot of prospective student loan refinance borrowers wondering if the term length will reset when they refinance.
The answer is yes. When you refinance, the term length will reset and your previous term length will have no effect on your new loan. That being said, if you’d like to pay down your loans early, you can do so without paying any additional fees. At DRB, there are no pre-payment penalties.
How long does it take to refinance?
Most student loan borrowers want to refinance quickly. Very quickly in fact. The student loan refinancing process isn’t quite as fast as Victor Espinoza on American Pharoah. That being said, the refinancing process has a lot of moving pieces. Depending on the type of loans you have and the servicer of those loans, the length of the process will vary. Right now, the average hovers around 3 weeks from submitting your application to funding of your loan for most student loan refinancers out there.
The application process is fairly quick and straightforward. It should take you about 20 minutes to fill out the application on DRB’s website. From there, your application will be reviewed by the lender for conditional approval. At this point, you will need to upload a number of supporting documents which verify the information in your application.
From here, your application will receive its final approval and your new student loan lender will pay off your old student loans to issue the new refinanced loan.
What is the catch?
This question comes up quite frequently. Low rates, no fees, financial freedom, what’s the catch? Student loan refinance comes with many benefits if you qualify. Frankly, there is no catch.
You should know that not everyone will qualify for student loan refinance. You will need to have good credit (+680), good income (+$50,000), a low debt-to-income ratio, and have a history of on-time student loan payments. If you don’t meet any one of these requirements, having a creditworthy cosigner can help you get approved.
Lastly, there are no fees when it comes to student loan refinancing. What you see is what you get. It is industry standard to pay no application, origination, or prepayment fees.
I hope I was able to answer a few of your questions! At LendEDU we’ve ranked DRB as one of the best ! DRB is certainly a great place to start the refinance process known for their competitively low rates.
By Nate Matherson
Nate Matherson is the Co-Founder and CEO of LendEDU. LendEDU is a marketplace for student loans and student loan refinance. LendEDU works to create transparency in the student loan market.