Comparing Private Loan Refinancing Rates for Texas Residents

BIG Ideas:

• Private student loan refinancing involves replacing one or more federal and/or private student loans with a single private loan. 
• Refinancing federal student loans with a private loan can result in the loss of valuable federal loan borrower protections, such as income-driven repayment, deferment, forbearance, and loan forgiveness.
• When comparing private student loan lenders, look at APRs, fees, repayment terms, and lender reputation. 

All good things must come to an end.

It may be a cliché, but it’s true when it comes to one exceptionally good thing: college life. 

The end of your college career can be a bittersweet time. On the one hand, you’re saying goodbye to friends and the freedom of student life. On the other, you’re entering another exciting phase of your life where you’ll build your career, start earning steady money, and work toward your financial goals. 

But along with those perks of adulting comes a big responsibility: paying back your student loans. 

Depending on your job, income, and living situation, that may be a tall task, especially if you have student loans with higher interest rates. 

Luckily, there’s a solution that can help you get relief: private student loan refinancing. 

Keep reading to get the answers to some important questions about refinancing private student loans. 

What is private student loan refinancing?

Student loan refinancing essentially involves replacing one or more federal student loans and/or private loans with one private loan from a private lender. When you refinance, your existing federal and/or private student loans are paid off with a new private loan. 

Private loan refinancing is different from federal loan consolidation because it allows you to refinance both federal and private loans, while federal loan consolidation allows you to combine eligible federal loans into a single federal loan. 

What are the benefits of private student loan refinancing?

Private student loan refinancing can help you:

• Lower your monthly payments 
• Pay off your loan sooner
• Reduce interest costs
• Potentially remove a co-signer from your loans 
• Simplify student loan management with one payment to one lender

What are the disadvantages of refinancing private student loans? 

The biggest drawback to private student loan refinancing is that if you refinance federal student loans with a private loan, you may lose valuable federal benefits, such as income-driven repayment, deferment, and forbearance. You will also be ineligible for federal student loan forgiveness programs, such as Public Service Loan Forgiveness, which helps eligible borrowers who meet certain requirements get their remaining loan balance forgiven.

How do you qualify for private student loan refinancing? 

To qualify for private student loan refinancing, you must have a steady income and be creditworthy. In addition, private student loan refinancing rates will also depend on your debt-to-income ratio and employment history.

If you don’t have a solid credit score or steady income, you could seek a co-signer to help you qualify for a better rate. 

Are interest rates the same for all private loans?

Unlike federal student loans that have set rates by the government, private student loan refinancing rates and loan terms can vary significantly from lender to lender. If you’re a Texas student or grad, you have lots of private loans available from banks, credit unions, online lenders, and non-profit lenders like Brazos. 

How can you compare private student loan refinancing rates?

Here are some things to look for:

• The type of rate – fixed or variable. With a fixed interest rate, your payments will stay the same for the term of your loan. With a variable rate, however, your payments could rise or fall depending on the interest rate environment. So, if you like the predictability of fixed student loan payments, you’ll want a fixed rate. 

  You should also check to see if the lender offers a rate discount for autopay. Having autopay can be a great way to lower your rate and ensure you don’t forget to make your payments.

• Repayment terms. Repayment terms, which can be 5, 10, or 20 years, can vary from lender to lender. Remember, the longer the term of your loan, the more interest you will pay. Conversely, a shorter-term loan can greatly reduce the interest you pay. 
• Fees. While many private student loan lenders in Texas don’t charge fees, you should still read the fine print carefully to ensure there are no application fees, origination fees, or prepayment penalties. At Brazos, we don’t charge fees for refinancing. 

When comparing lenders, look at each loan’s Annual Percentage Rate (APR), which reflects the total cost of borrowing rather than just the interest rate. 

Pro Tip: Be sure to look at mission-driven, non-profit lenders like Brazos, which may offer more competitive rates. 

What are other factors to consider with refinancing private student loans?

In addition to rates, you want to choose a lender that offers:

• Hardship assistance. Though most private student loans don’t offer the benefits available with federal student loans, many do offer some hardship assistance. That can provide added flexibility if you lose your job, become ill, or experience another life circumstance that could impact your ability to make your payments. 
  

• Co-signer release. If you need a co-signer to qualify for refinancing private student loans, some lenders let you release a co-signer after you make a certain number of on-time payments on your own.   
• Reputation/customer service. Of course, it’s always important to choose a lender with a good reputation and strong customer service to help you if you need assistance. Read reviews and talk to people in your network for recommendations. 

Private student loan refinancing can be a great way to take charge of your student loan debt and save money. But you need to weigh the pros and cons of refinancing with Texas lenders and compare rates, repayment terms, fees, and lender reputation to determine if it’s the right move for you. To learn more about private student loan refinancing, check out our Student Loan Refinance Guide. 

Brazos can help you save with refinancing private student loans 

For more than 40 years, Brazos Higher Education has helped students and parents finance the cost of college. As a Texas non-profit student loan lender, we offer competitive refinance rates that can help save money and reach your goals. Contact us today.