Many Americans refinanced their homes at the start of the 2008 recession; the decision helped keep many people in their homes. This is because the right loan refinancing deal reduces the amount of money borrowers are required to pay each month. It’s similar with Harvard loan refinancing and student loans.
As an example, let’s say you took out a private student loan for $60,000 at a 7.8% interest rate. Thanks to economic changes, interest rates drop, making it possible for you to take advantage of Harvard loan refinancing at a lower interest rate of 4.5%. It’s this type of deal that could reduce your monthly student loan payments by $100 or more a month.
Private lenders don’t always advertise Harvard loan refinancing options as aggressively as they advertise traditional student loans because lower interest rates mean smaller profits for the private lenders. However, some companies are lending $100 million or more to eligible students, people seeking to refinance existing loans in order to start digging out of debt.
According to USA Today, a student named Gil Eyal took advantage of these options through debt reduction programs and saved $500 a month on his student loan repayment bills. Over a lifetime, those types of savings could add up to $5,000 or more.
Although saving money is one of the main reasons why students refinance their loans, there are other benefits associated with Harvard loan refinancing and other debt relief programs.
With programs like Harvard loan refinancing, students might be able to itemize their deductions. According to Consumer Finance, with the right refinancing program, students can get lower APR rates on their loans.
However, students should pay careful attention to the APR. There are times when monthly payment installments are lowered, but over the length of the loan, due to higher interest rates, students actually end up paying more on the loan.
This isn’t the option students want. To truly take advantage of programs like Harvard loan refinancing, students and graduates should look for programs that lower their monthly payments and their interest rates.
Because tax laws allow qualifying adults to claim interest they pay on student loans on their taxes, people applying for Harvard loan refinancing should also make sure that the loans are structured so that they can continue to claim the interest they pay as a deduction.
In the event that students are considering refinancing a federal loan into a private loan, it pays to examine the tax and interest implications inherent in making the switch. As with taking out any new loan or refinancing any existing loans, students should ensure that they are financially capable of repaying the loans, interest included. They should have a reliable job and have enough savings to continue paying back the loans should something happen to their current working situation.
As reported by the Motley Fool, the sooner students and graduates refinance their student loans, the more they could increase their chances of getting a loan at a lower interest rate. This is important, because when refinancing older loans, students could end up paying 12% in interest.
However, when students refinance Harvard loans with Common Bond or similar organizations, the way they have managed their finances historically might play a bigger role than how long the loan has been open. Furthermore, in addition to being able to refinance through banks, some states are also developing refinancing programs to help students dig their way out of student loan debt.