You may have heard that refinancing your college loan as an international student might be a good idea, but you may not know what refinancing a student loan means and whether it’s right for you. Don’t worry. We’ll walk you through the fundamentals, including the benefits and downsides as well as eligibility criteria, so you can decide for yourself if refinancing is the way to go.
In a nutshell, student loan refinancing means replacing your existing student loan with a new loan from a bank, online lender or other private lender. That lender will pay off your current student loan and issue a new one in its place.
Depending on your credit, income and other factors, the new loan might have a better interest rate than what you have currently. Reducing your interest rate even a small amount can significantly reduce the amount of interest you pay over the life of your loan.
Let’s say, for example, that you took a US$25,000 student loan at a 15% interest rate on a 10-year repayment term. If you can reduce that rate to 12%, you could decrease your monthly payments by US$45 and reduce the amount of interest you pay by US$5,359 over the 10-year period.
There are a number of reasons why you’d want to refinance your student loan. Refinancing:
Before applying to refinance your student loan, it’s worth considering any downsides to this process. Here are some potential cons of student loan refinancing:
Every lender sets its own student loan refinancing eligibility requirements, but here are some common criteria you’ll need to meet:
It can be difficult to meet the requirements for student loan refinancing if you don’t have good credit or a steady source of income. Many U.S. lenders also require international students to apply with a cosigner who is a U.S. citizen or permanent resident.
However, not everyone has a cosigner who’s willing to share student loan debt. Once you’ve completed your undergraduate or graduate degree, you may feel ready to refinance student loans and manage your finances on your own.
MPOWER Financing understands that not all international students have a U.S. credit history or a cosigner. That’s why MPOWER offers student loan refinancing to international students with no cosigner or collateral required.
For more on the benefits of refinancing, check out our guide on the top five reasons to refinance international student loans.
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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