Why Refinance Your Private Student Loan
After you’ve graduated with your college degree, you might be looking for a way to make student loan repayment easier and save money on your loans. Refinancing your student loans can make your debt more manageable and reduce your interest rate. While refinancing student loans in the U.S. can be more challenging for international students, it’s still possible and worth exploring. If you’re wondering how to refinance private student loans, read on for all the details.
Reasons to refinance your student loan
When you refinance a student loan, a private lender pays off your existing student loan and issues a new one in its place. This can:
- Give you a lower interest rate than what you were previously paying, which can help you save money.
- Reduce your monthly student loan payment.
- Allow you to switch from a variable interest rate to a fixed rate for more predictable monthly payments.
- Release a cosigner or collateral from your current student loan.
- Pay back your student loan to a U.S. lender, so you no longer have to make payments overseas.
- Make your international student loan eligible for employer student loan assistance, if available.
How to refinance private student loans
At first glance, refinancing your private student loans seems like a great deal, and it can be. However, as an international graduate, you may have a difficult time refinancing private student loans with many lenders because of certain requirements.
To refinance your private student loans, for example, you may need one of the following:
- A good credit history in the U.S.
- A cosigner for your loan.
- A loan product specifically designed for international graduate students.
As an international graduate, you may qualify with any of these options. Depending on which lender you choose, you may need to take these steps to refinance your private student loan:
- Check your credit score/profile – Once you’ve been living and working in the U.S., you may have started building a good credit history of your own. If this is the case, it should be relatively easy to refinance your student loans.
- Compare lenders – Just as you did when you searched for a lender for your original student loans, you need to do your homework to determine which lenders offer refinancing to international students and what their interest rates, fees and terms are.
- Fill out your application form – Fill out the form completely. Read it over carefully before you hit Submit and make sure not to leave anything out.
- Submit your form and documentation – Submit any required documentation along with your application form, such as pay stubs, bank statements or proof of graduation.
Once your refinancing application is approved and your new loan is up and running, make sure to submit all your payments on time. Making on-time student loan payments can help build your credit score.
Challenges of refinancing private student loans
As an international student or graduate, you may face some challenges that domestic students don’t have. At the top of the list is not having a credit history. You can build a credit history by:
- Getting a U.S. credit card and using it responsibly by making purchases and keeping up with the monthly payments (ideally paying off the balance each month).
- Becoming an authorized user on someone else’s credit card.
- Having your monthly rent payments count as positive credit (your landlord may be able to report these to the credit bureaus, or you can use a third-party reporting service).
If you don’t yet have a good credit history of your own, you may need to apply to refinance private student loans with a cosigner who is a U.S. citizen or permanent resident. Perhaps you have a partner, or you have developed some trusted friends. Any of these people would qualify, as long as they have decent credit and are willing to share this debt.
Finally, to qualify for refinancing your student loans, you will need to provide your visa status. You may need one of the following visa types: J-1, H-1B, E-2, O-1 or TN. In addition to this, it is a good idea to prove that you plan to stay in the U.S. for the long term and are reliable. You can prove this by:
- Opening a U.S. bank account
- Showing that you have a steady job and reliable income
- Sharing your lease agreement
- Providing the payment history with your rent and your bills
Learn more about how to refinance a private student loan.
