Below, Senior Vice President of Student Lending at Citizens, Frederick Good, provides some navigational information for when student loan repayment begins:
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Q: How can borrowers prepare for repayment?
A: t’s important for borrowers to refamiliarize themselves with their current student loan situation before repayment starts- how many loans, under what terms, at what rates, and the total monthly payment that will resume.
It’s possible that refinancing could help borrowers simplify and save on monthly payments or interest rates (or both), but needs to be evaluated in the context of potential federal loan benefits, including whether or not they may be eligible for the recently announced forgiveness.
Q: What happens when you refinance a student loan?
A: When borrowers refinance a student loan, their underlying or original loans are paid off in full. The new refinance loan is originated as a single loan with terms and conditions presented to the borrower from their new lender.
Typically refinancing a loan can help the borrower to lower their interest rate or payment (or both) and simplify multiple loans into one, while potentially changing the loan term or possibly removing a co-signer. The underlying loans would be reported on the borrowers credit bureau as paid in full, and a new tradeline with the new refinance loan would be opened.
At Citizens, on average, we have seen our borrowers lower their payments by more than $3,000 annually with refinancing.