When it comes to repaying your student loans, you don’t have to be stuck with the same rates and terms until your loans are paid off. Student loan refinance could be a smart option to help you lower your monthly payments, pay off your loans sooner, or streamline your payments.

There is endless information available about student loan refinance, and the process and your options may seem overwhelming. What’s fact and what’s fiction? We can help! Here are three common student loan refinance myths debunked.

MYTH #1

I have to refinance all of my student loans.

While you typically can refinance and consolidate all of your student loans into one new loan, you do not have to! There may be reasons to exclude some of your loans from a student loan refinance.

For example, federal student loans come with certain benefits such as income-based repayment or student loan forgiveness for public service, and you may wish to keep those loans separate to maintain those protections.

Refinancing isn’t all or nothing—you can choose which loans to roll into your refinance and continue making regular payments on any you exclude.

MYTH #2

I can only consolidate/refinance my federal student loans with the federal government.

It’s true that the U.S. Department of Education offers a consolidation program for federal student loans, which combines multiple federal student loans into a single payment. A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent.

However, you may also be able to refinance your federal student loans with a private lender like a credit union. This refinance solution allows you to combine federal and/or private student loans into a new loan with one easy payment. Depending on the lender you select, you may have a choice of a fixed or variable rate, as well as different repayment terms. (Keep in mind you will lose certain benefits of your federal student loans if you roll them into a private student loan refinance.)

MYTH #3

Once I have refinanced my student loans, I cannot refinance again.

This is a common misconception, but the truth is refinancing isn’t a one-time opportunity. Why might you consider refinancing again?

• Lower interest rates: If rates drop or your credit score improves, refinancing again could reduce your rate and help you save money on interest over time.

• Different repayment terms: You may want to shorten your loan term to pay off debt faster, or lengthen it to lower monthly payments if your budget has shifted.

• Change in financial situation: A new job or living arrangement could prompt you to adjust your repayment strategy.

Putting It All Together

Student loan refinancing can be a smart financial move, but the key is knowing your options and understanding how each decision impacts your long-term goals.

Ready to start your student loan refinance with a credit union? Input some basic information and we’ll show you which credit unions could be the right match for you!