Should You Refinance Your Student Loans? Some Pros and Cons

Should You Refinance Your Student Loans? Some Pros and Cons

Note: In addition to the tips below, you can learn more from the free webinar Kellen Williams is hosting tomorrow, November 9, at 1pm EST:
Student Loan Best Practices – What Everyone with Student Loan Debt Should Know.

To register, go to

Student LOan WebinarWhen most nursing students graduate school, they leave with not only a degree but also a large amount of debt. One way to make it easier to repay this debt is by refinancing student loans – speaking of which, are you ready for the end of the student loan federal interest holiday?

In this article, we’ll discuss the benefits and the risks of refinancing, whether refinancing can help you pay off your loans faster, and what you can do to boost your chances of getting approved for refinancing. Also, don’t miss out on your student loan rate discount for being a Minority Nurse reader if you decide that refinancing is right for you :).

Here are some of the advantages and disadvantages to consider when refinancing your student loans.

The pros of refinancing your student loans

The benefits you can gain by refinancing your student loans include:

      1. You only have to make a single monthly payment: Refinancing consolidates your multiple existing loans into a single, new loan that has just one monthly payment. This can help make managing your debt simpler.
      2. Securing a lower interest rate: You may qualify for a lower interest rate, which could help lower the total amount you’ll spend repaying your loan.
      3. Paying off your loan faster: When you refinance, you’ll have the option to adjust your repayment terms. By shortening your loan term, you’ll be able to pay off your loan faster.
      4. Decreasing your monthly payment: Alternatively, you could decide to lengthen your loan term. This would decrease the amount you need to pay monthly but could also increase the total amount of interest you’ll pay over the life of the loan.
      5. You can obtain unique perks from private lenders: Some private lenders include unique benefits, such as financial resources to help inform your financial choices, or access to special banking products with interest rate discounts, e.g. the Laurel Road Checking (SM)  account, an FDIC-insured* online checking account with no minimum balance to open and $0 monthly maintenance fee. Laurel Road members that close on a new student loan refinance and open a new Laurel Road Checking (SM) account are eligible for an interest rate discount on their student loan.
      6. You can add or release a co-signer: If you haven’t had the opportunity to build up your credit yet, you might be able to apply with a co-signer. Applying with a co-signer who has a good credit score could help you qualify for a lower interest rate than what you’re currently paying.

    The cons of refinancing student loans

    You should also carefully consider these negatives and how they might affect you:

    1. Losing access to federal repayment programs and plans: If you refinance your federal loans, you’ll lose access to federal repayment programs, including income-driven repayment plans, such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR), Revised Pay As You Earn (REPAYE), and Public Service Loan Forgiveness (PSLF). For more information visit,
    2. Losing access to federal repayment protections: You’ll also lose access to federal repayment protections, such as forbearance and deferment, which can give you the opportunity to pause/lower your monthly payments.
    3. It may be difficult to qualify without a co-signer: If you don’t have an established credit history, you might find it difficult to gain approval for refinancing without a co-signer.
    4. Interest rates might increase: When you refinance, you’ll be able to select either a fixed or variable interest rate. Variable interest rates, which fluctuate according to the market, have the potential to rise, which could result in you paying more over the lifetime of your loans.
    5. You’ll end your grace period: Not all federal student loans have grace periods but for those that do, if you decide to refinance during your grace period, you may have to start repaying immediately.

     Can refinancing help you pay down debt faster?

    It could, by refinancing and shortening the term of their loan, borrowers can decrease the amount of time it will take them to pay it back. Note that this could result in your monthly payment going up. However, depending on the interest rate you qualify for, you may find this increase is negligible.

    What do you need to qualify for refinancing?

    Refinance lenders typically look for:

    • A degree from a qualifying institution
    • Eligible student loans
    • A minimum credit score in the mid to high 600s
    • Proof of sufficient income

    If you’re interested in refinancing, check out Laurel Road’s student loan refinancing options for students and professionals and see if refinancing makes sense for you. It’s never too soon to figure out a long-term plan to manage your student loan debt.

    *Deposits are insured up to the maximum allowable limit. Laurel Road is a part of KeyBank N.A. All single accounts owned by the same person at KeyBank N.A. are added together and insured up to the maximum allowable limit. To learn more, contact the FDIC toll-free at 1.877.ASK.FDIC (1.877.275.3342) or visit
    In providing this information, neither Laurel Road or KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.
    Any third-party linked content is provided for informational purposes and should not be viewed as an endorsement by Laurel Road or KeyBank of any third-party product or service mentioned. Laurel Road’s Online Privacy Statement does not apply to third-party linked websites and you should consult the privacy disclosures of each site you visit for further information.
5 Student Loan Facts You Need to Know

5 Student Loan Facts You Need to Know

As any student knows, education is expensive. No matter how you do it – part-time, full-time, nights, days – tuition costs money and, quite frequently a lot of it.

Lots of students seek out help for college costs through scholarships, work reimbursements, work study, grants, and loans. Of all these, loans cause the most long-lasting effects on your budget because they have to be paid back. When you’re considering your loan options to finance your education there are a few things you should know.

1. All Loans Are Not the Same

Federal loans (including direct subsidized and unsubsidized, Direct PLUS, and federal Perkins loans) are made by the federal government and generally have a fixed, low-interest loan rate. These loans are paid back over a designated number of years and the interest rate (fixed) remains the same throughout the life of the loan.

Private loans are generally made through a bank or credit union and the rates are generally variable. These loans sometimes require another person to sign the loan (a co-signer) and the interest rate (variable) can change over the life of the loan. Private loans typically start out with a low interest rate, but the rate is almost guaranteed to rise over the life of the loan. If you choose a private lender, ask if there’s any fee if you pay the loan in full before the loan’s designated end date.

2. Nursing Students Benefit from Specialized Loans

Nursing students can seek out loans specifically for their field. The Department of Health and Human Services has loans specifically for those in health professions. There are several nurse loans available through the department’s Nursing Student Loan Program, which is administered through your school’s financial aid department.

3. Loan Repayment Options

Some student loans can be partially paid by working for the Nurse CORPS, in which you agree to work for two years in exchange for paying off up to 60 percent of your loans. Like a service contract, nurses work in poorer communities to better the health of the residents and build strong community ties in the process.

4. Postponing Loan Payments

If you find yourself unable to repay your loan for various reasons, a deferment plan can postpone your payments, and interest will not accrue in the meantime. Another option allows you to defer payments, but interest will continue to accrue. Federal loans are typically more favorable to a deferment, and private lenders are under no legal obligation to offer any kind of deferment. It’s very difficult to get any type of loan forgiven, meaning the loan grantor will absorb your remaining loan, and you won’t have to make additional payments.

5. Defaulting on Loans

Entering into a student loan contract is serious business, so consider everything carefully. Defaulting on a student loan, meaning that you claim an inability to ever repay the loan, is almost never an option. The federal government will pursue repayment in many ways (taking your tax return is one), and although private lenders don’t have quite as many options for getting their money as the federal government, they can still wreak havoc on your credit history and make it difficult for you to get future loans.