What is student loan refinancing?

Student loan refinancing is the process of replacing an existing student loan with a new loan that has new terms such as interest rate, monthly payment amount and repayment period.

What is student loan consolidation?

Student loan consolidation is the process of taking multiple student loans from one or several providers and consolidating them into a new single student loan with new terms such as the interest rate, monthly payment amount and repayment period.

Is refinancing or consolidating right for me?

The decision to refinance is a personal one—only you can decide if it makes sense for your unique situation. For assistance in deciding, watch these videos: Things to Consider, Making the Decision, and review Things to Consider Before Refinancing, gather your loan information and then see How to Choose a Lender to help you decide.

Should I look for a student loan with a fixed or a variable interest rate?

It depends, consider. . .

Fixed rate student loans:

  • May carry a higher rate than variable rate student loans
  • Are not impacted by interest rate changes
  • Provide consistent monthly payments for the life of the loan

Variable rate student loans:

  • Are impacted by interest rate changes
  • Rates can change as frequently as monthly or quarterly and could change significantly over the typical repayment period of 10 to 15 years
  • May actually be less expensive than a fixed rate loan depending on the interest rate environment over the payback period

Which type of rate, fixed or variable, is right for me?

It depends. Say you can pay off your student loan debt quickly—a variable rate student loan may be a cost-saving solution if the rate is lower than available fixed rates and if the rate does not increase above the available fixed rate during the repayment period. Just remember, the longer it takes you to pay off the loan, the more opportunity there is for variable interest rates to change. You may lower the risk of your interest rate increasing by looking for a lender that caps variable rates.

A fixed rate student loan may make it easier to plan and budget for since your monthly payment will remain the same for the life of the loan.

How are variable interest rates determined?

Variable interest rates are often tied to common indices like the Prime Rate or LIBOR (The London Interbank Offered Rate) and can change as frequently as every 30 to 90 days. For example, for loans with a rate tied to the Prime Rate, when the Prime Rate goes up, the interest rate of a variable student loan rate subsequently rises and when the Prime Rate goes down, the interest rate will subsequently decrease.

Are fixed rates stable (remain the same) through the life of the loan?

Yes. The fixed interest rate remains constant throughout the life of the loan. In a rising interest rate environment, this can be comforting. In a decreasing interest rate environment, this can be concerning.

What is the estimated time it takes from the date of online loan application to approval of the loan?

The online application takes approximately 40 to 60 minutes to complete and initial approval is often determined at that time. There may be some loans that require additional review or income verification before receiving a final approval.

Am I eligible to refinance or consolidate my student loans with the Maine Private Education Loan Network lenders?

You may be eligible to refinance or consolidate private and federal student loans (with the lenders in the Network) if you meet certain requirements such as:

  • You have at least $10,000 in student loans to refinance, which can include private student loans from other lenders and/or your federal loans like Direct, PLUS or Stafford loans.
  • You are a Maine resident, graduate of a Maine high school or attended a Maine college or university; and
  • You meet credit criteria for loan approval.

What are my options?

  • Leave your loans as they are currently.
  • Combine your private and federal student loans into one loan.
  • Refinance only your private student loans.
  • Consolidate your federal student loans in a Federal Direct Consolidation Loan.

Only you can decide the right choice for you.

What kinds of education refinance loans are available?

Federal Direct Consolidation Loans

The Federal Direct Consolidation Loan Program offered by the federal government allows borrowers to combine any of their outstanding federal student loans into a single new loan. The fixed rate is based on the weighted average interest rate of the loans being consolidated.

Private Education Refinance and Consolidation Loans

Private education refinance and consolidation loans are credit-based loans offered through a bank, credit union or state agency.

Seaboard FCUSeaboard FCUMaine State Credit Union

What should I do if I cannot afford to pay my student loans?

You should contact your loan servicer as soon as possible to discuss. Student loans are not dischargeable and must be repaid.

Are there ways to reduce my interest rate on my student loans other than refinancing?

If you have federal student loans and want to keep their protections, you may have options other than refinancing to lower your interest rates, so explore those first. Many servicers will reduce your rate if you enroll in automatic payments.

They also may do the same if you make a set number of on-time payments in a row. Call your servicer, and ask it they offer these benefits or others.

In addition, consider paying extra every month. There is no penalty for prepayment with federal student loans, and paying off your loans faster can reduce the amount of interest you pay overall, even if your rate stays the same.

Ultimately, these reductions may not subtract as much from your monthly payments as refinancing would. Still, add these benefits to those from keeping your loans in the federal student loan program. The result may end up making more sense for you overall.