Best Debt Consolidation For Student Loans – Only PenFed offers partner student loan consolidation – but you also have the option to refinance with your spouse as the buyer.
Our goal is to give you the tools and confidence you need to improve your finances. All opinions are our own, even though we receive compensation from our partner lenders, which we will always identify. Operations, Inc. NMLS #1681276, referred to here as “”.
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According to EducationData.org, more than 43 million adults in the US have student loan debt – so if you’re married, there’s a good chance you and your spouse will have student loan debt. Considering that the typical graduate has between eight and 12 different credits, a married couple may have 24 credits to manage – making the idea of bundling student loans with your spouse tempting.
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If you consolidate your debt, you have one loan to manage and one monthly payment to remember. As of 2021, PenFed Credit Union is the only lender that allows couples to combine their loans together. But you have other options.
Yes, you can combine your student loans with your spouse’s loans if you refinance them through a lender such as PenFed. Your spouse may also consider refinancing student loans as a co-signer (or vice versa).
Remember: In 2006, the Department of Education ended the Joint Consolidated Loans program. This means that married couples with federal student loans cannot combine these loans through the state.
The only way to combine a federal loan with your spouse’s loan is with a private student loan consolidation, which is very different from a federal consolidation. If you refinance federal student loans or combine them with a spouse’s debt, you are replacing your federal student loans with private student loans. This means you’ll lose access to federal student loan payment options and protections, such as income-focused payment plans and student loan forgiveness programs.
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Here are some key differences to keep in mind before deciding whether to combine or lease student loans with your partner:
With a joint loan consolidation, the lender will consider your combined income and debt and set your interest rate based on the highest credit score and education level between the two of you. This can be a good option if you are a stay-at-home spouse, earn significantly less than your spouse, or haven’t finished college yet.
If you choose to refinance your partner loan, you will have more lenders to choose from. In addition, some lenders offer a buyer’s discharge option – which means you can be removed from the loan after a certain number of consecutive, timely payments are made.
If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for you and your spouse. That makes it easy — you can compare your prequalification rates from multiple lenders in two minutes.
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Some lenders offer options for the borrower to be released from the loan. This can help if:
To qualify for a buyer’s disposal, the primary borrower must make sequential and timely payments, usually over a specified period of time—usually one to four years, depending on the lender. They must also meet the criteria for self-insurance.
If you want to refinance your student loans with a lender that offers a buyer’s disengagement option, be sure to consider as many lenders as possible first. In this way, you can find the most suitable loan for you and your partner.
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How much you can save through student loan refinancing will depend primarily on the interest rate you are eligible for and the repayment term you choose. In general, you need good to very good credit to qualify for the lowest interest rates – a good credit score is generally considered to be 700 or higher.
You can also keep general interest costs low by choosing shorter repayment terms. Also, some lenders offer lower rates to borrowers who prefer shorter terms.
For example: From November 1, 2019 to December 1, 2020, borrowers who refinance student loans through the marketplace and choose shorter repayment terms are projected to save an average of $16,943.
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If you refinance your student loans at % interest, you can save, pay an extra $ every month and pay off your loan by the due date. The total cost of the new loan will be $.
$116,943 savings disclaimer: The savings estimate assumes the consumer analyzed will make full and timely monthly payments over the term of the loan, based on a promissory note. Actual savings may be higher or lower. Calculating an average savings of $16,943 created between (1) November 1, 2019 and December 1, 2020, with information users share about their original loan (such as loan balance, repayment period, and interest rate); and (2) the actual loan term for the same user who refinanced a student loan with a shorter repayment period than the weighted average of months remaining to full redemption of the previous loan(‘) is calculated using the information shared with the user. This calculation excludes borrowers who refinance loans of the same or longer duration or who report loan terms that differ from their normal user experience: (i) any loan term of less than one (1) year or more than twenty five years (25) before refinancing the remaining number of years; (ii) loan repayments of more than $5,000 per month before refinancing; and (iii) existing loan amounts (before refinancing) that deviate by more than five (5) percent of the loan amount repaid at the time of refinancing. Our calculations do not take into account variable factors such as a borrower’s potential eligibility for loan forgiveness, variable interest rates, deferrals, late payments, lost payments, missed payments or prepayments. Please note that your actual savings may vary depending on interest rates, balances, loan terms, credit scores and other factors.
Angela Brown is a student loan, personal finance and real estate officer and contributor. His work has been published on Fox Business, LendingTree, FinanceBuzz and Yahoo Finance. Our goal is to give you the tools and confidence you need to improve your finances. All opinions are our own, even though we receive compensation from our partner lenders, which we will always identify. Operations, Inc. NMLS #1681276, referred to here as “”.
The average monthly student loan payment is $393. Because it is so tall, you may find it difficult to meet your daily needs. Here are a few different ways to reduce student loan payments to give yourself room in your budget.
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If you have federal student loans and require lower payments and want to make payments over a longer payment period, an Extended Payment Plan may be right for you. With this approach, your payback period can be extended by up to 25 years, significantly reducing your monthly payments. To qualify, you must have at least $30,000 in a Direct federal loan or FFEL.
Because of the longer repayment terms, you may end up paying thousands more than you originally borrowed in interest. However, it may be worth compromising to get a lower payout and make room in your current budget.
The Progressive Payment Plan is perfect for people who don’t qualify for an income-based payment plan for their federal loans but are unable to meet their payments below the standard 10-year maturity.
With the Progressive Repayment Plan, your payments start out very low regardless of your income. Your payments increase every two years. Your loan is repaid after 10 years of payments.
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Under an Income Sensitive Payment Plan, your federal loan payments are based on your income. After 15 years, your loan is paid off. You pay more in interest than under the Standard Payment Plan, but you get more breathing room in your monthly budget.
If you have a Federal Direct Loan and need to reduce your monthly bill, consider applying for an income-based payment plan (IDR). With the IDR package, your payment term is extended to 20 to 25 years, and the loan service provider determines your monthly payment as a percentage of your additional income. Some people qualify for payouts as low as $0.
If you sign up for automatic payments, some lenders will lower your interest rate from 0.25% to 0.50%. It may sound like a small difference, but these interest rate adjustments can result in significant savings over time.
Check with your lender to see if they offer a direct debit discount so you can take advantage of it.
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