Paying back student loans is challenging, especially if you’re living in the United States and making payments to a bank in another country. By refinancing your international student loans with a U.S.-based lender, you could simplify repayment and potentially save money on interest.
In fact, there are a number of reasons why the answer to “Should I refinance my private student loans?” could be yes.
Here are five of the top potential benefits of refinancing your student debt in the U.S.:
More companies than ever are offering student loan benefits to their employees. These companies will match a portion of your student loan payments — up to $5,250 per year tax-free — to help you pay off your student loans.
Even if you’re working for one of these companies, your international student loan might not qualify for this assistance. Fortunately, there’s a workaround: You could make your loan eligible by applying to refinance it with a lender in the United States.
Through refinancing, you’ll replace your international student loans with a loan in the U.S. Your new loan may be eligible for employer-sponsored student loan assistance, and you could pay back your debt faster as a result.
One of the major benefits of refinancing private student loans is getting a lower interest rate. If you can qualify for a better rate than what you have currently, you could save hundreds or even thousands of dollars over the life of your loan.
For example, let’s say you owe $35,000 in student loans at a 11.00% interest rate. If you can bring that rate down to 7.99%, it could reduce the amount of interest you pay by almost $7,000 over ten years. Your monthly payment would also go down by $58.
Lowering your interest rate through refinancing could save you money on your student loans and ease the burden of repayment.
Deciding to refinance your student loans might also allow you to release a cosigner or collateral from your international student loan. If you applied for the loan with a cosigner, that person is on the hook for your student debt.
If you fail to make payments, the lender could demand repayment from your cosigner. If you have collateral attached to your international student loan, a lender could consider your loan in default and initiate a process to seize these assets in the event you don’t pay.
By refinancing, you might be able to take out a new student loan on your own, thereby eliminating the risk for your cosigner or collateral. While some refinancing lenders require international graduates to apply with a U.S.-based cosigner, MPOWER Financing lets you apply on your own.
In the U.S., you need a strong credit score to take out a loan, open a credit card, or even rent an apartment in some cases. Credit scores are based on your history of managing debts, among other factors. For example, paying your bills on time will increase your credit score, while missing payments or maxing out your credit cards will decrease your score.
Your credit score is entirely based on U.S.-based financial activity — it doesn’t take international loans into account. If you immigrated to the U.S. from another country, you might have to start from scratch with your credit score.
By choosing to refinance your international student loans in the U.S., you can start to build your credit history and increase your credit score. If you make on-time payments, you’ll see your credit score begin to improve.
As your credit score grows stronger, you’ll have an easier time qualifying for loans, credit cards, and other financial products in the United States.
Refinancing with a U.S.-based lender could make student loan repayment easier if you’re living in the United States since you’ll no longer have to deal with currency exchange rates, international transfers, or international banking fees.
Plus, you might gain access to new benefits. Some lenders offer borrower protections such as the ability to pause payments through forbearance or deferment if you run into financial hardship.
Others let you prepay your student loans without penalty, so you could make extra payments to get rid of your debt faster without racking up any fees. If you haven’t had a great experience with your lender so far, changing to a new one through refinancing could offer a more positive experience.
Applying to refinance your international student loans with a lender in the United States offers a variety of potential benefits, from saving you money on interest to helping you build your U.S.-based credit history. If your goal is to become financially independent, refinancing your student loans with a lender like MPOWER Financing could help you get there, as MPOWER doesn’t require you to have a cosigner.
If you get hired by a company that offers student loan assistance to its employees, refinancing your loan could make it eligible for this useful benefit. In fact, you could receive up to $437 per month (or $5,250 annually) tax-free to put straight toward your student loans (and some companies offer even more). This additional payment toward your student loan balance could go a long way toward helping you get out of debt faster and saving money on interest.
At the same time, keep in mind that if you refinance your international student loan in the U.S., you’ll no longer hold a student loan in your home country. If your current lender offers any benefits that you don’t want to sacrifice, you might be better off leaving your student loans as they are.
If you find the benefits outweigh the downsides, choosing to refinance private student loans in the U.S. could help you better manage your education debt.
DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.
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