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How Student Loan Refinance Works

In the U.S.A., before you decide to refinance your student loan, you must look at the various repayment plans available to students who face hardships in meeting their required payments on time. Such methods include changing your standard 10-year repayment plan to a different one—for example, the income-based one, where your payment is based on your income. The graduated plan offers you a gradual increase in your repayment schedule or the extended program, which has a longer repayment term.

Students who are incapable of meeting their regular payments may want to consider putting in a request for forbearance or deferment, which will give them some extra time to meet the set deadlines for their required payments. In certain specific circumstances, such as by means of the Teacher Student Loan Forgiveness program, a complete waive-off of the federal student loan debt is possible. When you decide to refinance a federal student loan, it no longer remains the same but is considered a private loan, as it has now been deprived of all the benefits of a federal student loan.

In short, student loan refinance is a process that enables you to take out a completely new loan that pays off or replaces all your previous student loans in a single loan refinancing transaction.