In the ever-changing world of student loans, staying on top of current events and student loan rates is critical. Below are this week’s student loan trends that could affect your loans — and your wallet.
1 current trend within student loans for the week of June 7, 2021
1. SoFi launches student loan refinancing option that includes administrative forbearance
Private student loan servicer SoFi has created a new refinancing program that allows federal student loan borrowers to refinance some or all of their loans without forfeiting the current payment and interest pause for federal loans. By refinancing now, borrowers will be able to lock in historically low interest rates on their student loans.
Borrowers can apply for refinancing on SoFi’s website and choose to delay disbursement until the federal forbearance period ends on Sept. 30. Approved borrowers can also choose to adjust the loan amount requested or cancel the loan before it’s disbursed. This is especially important to know in case they become eligible for additional assistance or debt forgiveness as a federal borrower in the meantime.
How this affects student loans
Because most federal student loans have paused payments and interest charges through Sept. 30, refinancing to a private loan hasn’t been a good option for federal borrowers — even though interest rates are low. SoFi’s program is the first to make the refinancing decision easier for borrowers who were worried about giving up federal benefits.
Anthony Noto, CEO of SoFi, explains that the program is the best of both worlds: Borrowers can lock in a low rate now without sacrificing temporary federal benefits. “We’re making sure federal borrowers don’t have to choose between long-term financial health and short-term relief,” he says.
Keep in mind that borrowers who choose this option will still lose federal benefits like income-driven repayment plans and extended forbearance periods, which is why it’s still important to consider all of the benefits and drawbacks of refinancing. Refinancing is also usually only worth considering if you can get a lower interest rate than what you’re paying now. Still, SoFi’s program could be a lifeline if you were planning on refinancing after the forbearance period ends.
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.