ReFi Student Loans?

June 16, 2004 6:53 AM

Is it possible to get a lower interest rate on my student loans? I began paying off my loans in 1999. In mid-2001, I refinanced them through the government and got a slightly lower interest rate (5.7%). Since then, of course, interest rates have gone way down, but the government won't let me refinance more than once. Occasionally I get offers in the mail from companies offering student loan refinancing, but my instinct is not to trust them. Are there any advantages/disadvantages of refinancing through a private bank? Any other ideas?
posted by Tin Man to work & money (4 comments total)

OK, so I just refinanced my student loans, but it was before I started paying them so I was able to get low rates. Call Sallie Mae and see what you can get. If you have paid your loans on time every month and your credit isn't crap, you should get a good deal. This is because banks love theses lones - it's free money [the government backs these loans] - so they always like new account holders. A 10 minute conversation with them will answer your question.
posted by plemeljr at 7:32 AM on June 16, 2004

In a nutshell - NO. Once government-backed student loans have been consolidated, they cannot be refinanced. You are stuck with the interest rate for the life of the loan. Hey, at least you got 5.7%, my loans were at 8%.

The only option would be to take out an equity loan on your house and use that to pay off the higher % rate student loans. The upside to that is that you'll be paying a lower interest rate (maybe, rates have gone up) and you can write off the interest at tax time. Also, you can roll the equity loan into a bankruptcy if necessary, unlike student loans, which cannot be included in bankruptcy. The downside is that you may use up all of the equity in your home and you also lose the ability to defer payments if necessary.
posted by Juicylicious at 7:37 AM on June 16, 2004

There is one other option- take out new student loans at the new lower rate. You can then consolidate these with your old loans, and you will get a rate that is the weighted average of the rates on the old loans.

I had debt from a BA & MA in the early 90's at 8%, then took out enough loans to cover another Masters in 2000 at about 2.5%- when I consolidated my rate came in at about 6%, since the earlier debt was much larger.

This is only a good idea if the new education is going to improve your income in the long run.
posted by InfidelZombie at 9:58 AM on June 16, 2004

I've got the same problem - my loans were already consolidated, and no one else in my family has student loans that could be consolidated with mine. So I'm stuck with an 8% interest rate. I've considered rolling it all into a credit card, as sometimes we get these low fixed rate offers.
posted by jasper411 at 11:22 AM on June 16, 2004