The easiest way to lower your interest rate when refinancing your loans is to finish the process before your grace period is up. There is usually a six month grace period after graduation before you must start repaying your loans. If you refinance before the end of this window, your rate is automatically reduced by .6 percent. This rate is locked in for the remainder of your loan repayment.
This may seem like a small percentage but it is more substantial if you look at the big picture. Combine this .6 percent rate reduction with further rate reductions based on consecutive on-time payments and cash-back incentives. Now you are getting the bigger picture. Your student loan interest is shrinking by the minute.
It is not about one incentive or reduction. Look for the best combination of all these features when refinancing and your loan package will shape up to be much better than you thought it could.
There is the potential to drastically reduce your interest rates, principal loan amount and monthly payments through refinancing during the grace period and continuing to make payments on time and in full. Once you consolidate your loans you start repaying them, unless you notify your lender that you wish to continue with your grace period. So make sure to let them know how you wish to proceed.
|Jennifer Mathes, Ph.D.|