It’s tough to pay back student loans if you’re living in the United States and paying them to a bank in another country. You could make payments easier by refinancing your international student loans through a US-based lender.
In truth, there are a number of reasons why the response to “Should I refinance my private student loans?” might be yes.
5 Reasons to Refinance Private Student Loans in the U.S.
Here are five of the most significant benefits of refinancing your student debt in the United States:
- Qualify for student loan repayment assistance.
- Switch to a lower interest rate.
- Release your cosigner or collateral from your loan.
- Build your credit history in the U.S.
- Switch to a lender that is easier to deal with.
1. Qualify for student loan repayment assistance.
Student loan perks are available from more businesses than ever before. These companies will match a portion of your student loan payments — up to $5,250 per year tax-free — to assist you in repaying your student loans.
Even if you work for one of these businesses, your international student loan may not qualify for this aid. Fortunately, there is a solution: You can apply to refinance your loan with a lender in the United States to make it eligible.
By refinancing, you’ll replace your international student loans with a U.S.-based loan, which may be eligible for employer-sponsored student loan assistance.
2. Switch to a lower interest rate.
A lower interest rate is one of the most significant advantages of refinancing private student loans. If you can get a rate that is lower than the one you are paying now, you may save hundreds or even thousands of dollars over the life of your loan.
Let’s assume that you have $35,000 in student loans with an interest rate of 11%. If you can reduce the rate to 7.99%, you could save almost $7,000 in interest during ten years. Your monthly payment will also go down by $58.
You could save money on your student loans and make things easier by refinancing.
3. Release your cosigner or collateral from your loan.
You may be able to remove a cosigner or collateral from your international student debt if you decide to refinance it.
If you obtained the loan with a cosigner, he or she is responsible for the loan if you cannot make the payments. If you do not make your payments, the lender can ask your cosigner to repay the loan. If you have collateral attached to your international student loan, a lender could consider your loan in default and take legal action to seize these assets if you don’t pay.
However, by refinancing, you may be able to obtain a new student loan on your own, thus eliminating the risk for your cosigner or collateral. While some refinancing lenders demand that international graduates use a U.S.-based cosigner, MPOWER Financing allows borrowers to apply on their own.
4. Build your credit history in the U.S.
In the United States, a good credit score is required to obtain a loan, open a credit card, or rent an apartment in certain situations. Credit scores are based on your track record of debt management, among other things. Paying your bills on time will raise your score while failing to pay them or maxing out your cards will lower it.
Your credit score is calculated using only activity from the United States, so it doesn’t account for international borrowing. If you moved to the United States from another country, your credit score may need to be rebuilt from the ground up.
You can start to build your credit history and improve your credit score by refinancing your international student loans in the United States. If you make timely payments, you will see your credit score rise.
As your credit score improves, you’ll be able to get loans, credit cards, and other financial services easier.
5. Switch to a lender that is easier to deal with.
If you are living in the United States, refinancing your student loans with a U.S.-based lender could make your repayments easier. This is because you will not have to worry about currency exchange rates, international transfers, or international banking fees.
Furthermore, you may be eligible for new perks. Some lenders provide borrower protections such as the ability to defer or pause payments in case of financial difficulty.
Other lenders allow you to prepay your student loans without penalty, allowing you to make more payments to get rid of your debt faster with no penalties. If you’ve had a negative experience with your lender thus far, switching to a new one through refinancing might provide for a better experience.
Refinancing your international student loans with a lender in the United States may provide you several advantages, such as lowering your costs of interest or assisting you establish your credit history in the United States. If you want to be financially self-sufficient, refinancing your student loans with a lender like MPOWER Financing might help you do so because it doesn’t require a cosigner or collateral.
If you get hired by a company that offers to help its employees with their student loans, refinancing your loan could make you eligible for this benefit. For example, you could receive up to $437 per month (or $5,250 annually) tax-free to put towards your student loans. This would help you pay off your student debt faster.
Remember, if you refinance your international student loan in the U.S., you will no longer have that student loan in your home country. If your current lender offers any benefits that you don’t want to lose, it might be better to leave your student loans as they are.
If you think the advantages outweigh the disadvantages, refinancing private student loans in the United States may be a smart option.