Student loans are unpleasant are prevent you from enjoying your graduate life. When you have a debt, you can’t stop thinking about it every day; there is a lot of instability in today’s society and you can find yourself in the impossibility of repaying the loan money back anytime.
The US Government has thought about situations when people with student loans cannot cover their debt. They have created the Federal student loan consolidation program, an initiative aiming to support people who have to pay one or more study loan. Basically, they offer private student loan consolidation, which means the possibility to refinance your existing debts into a single loan with low interest rate. In this case, you will have one lower monthly payment, so you can start saving or doing other things with the extra money. In some cases, the savings could reach $20,000 or more, especially if your studies were in the field of health.
How can you get the approval for refinancing your student loans?
It’s not very easy to get refinancing, especially if you ask it form private lenders. The situation is different when you apply for a federal consolidation loan. Of course, they have some approval criteria, but their main purpose is to help young people.
If you don’t want to be disappointed when you apply for a loan consolidation, think about the general approval criteria; usually most of them are common for both private and federal lenders. Let’s see what they look at:
- Good credit score
The credit score is a barometer of financial responsibilities. When it is evaluated, most lenders will look at your rate of meeting financial obligation and if you have a history of on-time payments. Generally, a good credit score means 600, but it’s safer to aim for 700.
- Income is very important
Your income is very important when you are applying for a student loan. Private lenders will analyse it and calculate to see if you will have enough money to survive after you make the monthly repayment. Also, they will consider other debts (for example, mortgage, a car credit). If your income is not sufficient, you will have more chances to get approved if you have a co-signer with good credit profile.
- A low Debt-To-Income ratio
- You should be employed
If you don’t have a stable job or at least an offer, it is difficult to receive approval for a student loan consolidation. If that’s the case, you could try with a co-signer.
If you get rejected by one or two lenders, don’t give up! You can still get the refinancing if you follow some steps:
- You should check your credit report
- Consolidate other debts
- Pay off older credits
- Do something to increase your income (get a second job)
- Find a qualified co-signer