Smarter Debt: How to Refinance Student Loans Without a Degree
Student borrowers as a whole owe a collective 1.76 trillion dollars. If you’re one of these students, you may be able to get some relief by refinancing your loans.
Refinancing allows borrowers to take out a second loan to pay off their student one. Doing so will let you enter better repayment terms. You might even be able to get a lower interest rate.
If you dropped out of school, no worries. Some lenders will let you refinance student loans without a degree, but you will need to meet certain requirements. Check out this guide to learn what these requirements are.
Is it possible to have a student loan refinance?
The answer is yes. Refinancing is an option for almost every person who’s suffering from student debt.
It’s a great solution for those who have dropped out of school or if they’re looking for a new lender. Some people refinance to get a jump on their student debt while they’re in graduate school. As stated above, refinancing may also allow you to get a lower interest rate.
You’ve Dropped Out
After you drop out of school, you can expect to start repaying your student loans within about 6 months. This is true even if you only plan to be out of school for a year.
Many private lenders will allow you to refinance your loans with or without a degree in your hands.
You Can’t Afford Your Payments
Are you having issues paying back your monthly loans? Depending on the terms of your student loan, refinancing may allow you to negotiate longer repayment terms.
Longer repayment terms mean that you’ll get to take advantage of lower monthly payments.
You’re Looking for a New Lender
Are you having problems with your current lender? Refinancing will allow you to get a fresh start with a new one.
Do your research and read customer reviews to find a lender that will better put you on track toward meeting your financial goals.
You’re Trying to Get a Lower Interest Rate
Many student loans come with a high-interest rate. If you’re unfamiliar with what an interest rate is, it’s a fee that you pay in order to borrow money that’s tacked on to the overall amount you owe.
The higher the interest rate, the more difficult it will be for you to make a dent in your student debt. If you’re looking for a lower rate, refinancing might be able to help you get it.
You’ve Entered Graduate School
If you’ve decided to pursue a master’s degree, there’s no reason to wait until after you graduate to get a better rate. Prepare for your financial future right now by refinancing.
Refinancing Requirements
Again, not every lender will require you to have a degree before they’ll allow you to refinance. In most cases, all you’ll need is a good credit score, a low debt-to-income ratio, and meet a minimum refinancing amount. If you have no job you can check how to apply for a loan without an income
Decent Credit Score
The main factor that lenders look at before approving you for refinancing is your credit score. If you’re fresh out of school and don’t have a lot of credit history under your belt, there’s a good chance that you’ll be rejected on the spot.
To take advantage of the lowest interest rates available, your score needs to be at least in the 700 range. If your credit score is lower than the mid-600s, you may need to create a budget to help you improve it before you apply.
If you know someone with an impeccable credit score, you might be able to qualify if they’re willing to co-sign for you. The downside is that if you don’t make your payments, you’ll drag their credit down.
Debt-to-Income Ratio
Your debt-to-income ratio is a measure of the money you spend on bills every month. The more income you have that’s not tied up in prior engagements, the more likely you are to get approved.
To better your chances, be sure to leave at least half of your monthly income open for other expenses. If your debt-to-income ratio is any less than that, it will make lenders a bit cautious.
Solid Income
If you’re not bringing in a lot of monthly income, you’re not going to have the cash needed to pay back your debts. At least that’s how lenders see it.
To prove that you’re good for the money, lenders will ask to see bank statements and pay stubs. They want to see that you have a steady amount of money entering your bank account every month.
Minimum Amount
If you don’t owe a lot of money in student loans, you may not be able to refinance. Most lenders have minimum borrowing amounts.
This amount is different for every lender. In most cases, it starts at $5,000. Some push it to $10,000.
The good news is that most lenders don’t have a maximum amount. Even if your lender does, it will most likely be something ridiculously high like $500,000.
Classes Completed
While every lender doesn’t require you to have a degree, some won’t approve you for refinancing unless you complete a certain number of classes.
If you only finished one semester before dropping out, you may struggle to get a loan.
Refinance student loans for borrowers
Lenders that will refinance student loans will be pleased to help you. High-interest private student loans are related to variable rate loans. Refinancing with no degree is a possibility to get a new interest rate. Are you not eligible for a student loan forgiveness? Then borrowers will check you whether qualify for refinancing or not. Refinancing without a degree is challenging. Refinancing gives you the chance to lower your monthly student loan. Besides, you can join multiple loans into one.
Can You Refinance Student Loans Without a Degree
You can refinance student loans without a degree as long as you meet certain criteria. You may have to complete a set number of classes before qualifying.
Most lenders will ask to see bank statements proving that you’re making a steady income, and your credit score will have a huge role to play. Check today your eligibility requirements for refinancing and refinance your student loan with a new and better interest rate.
For more tips that will help you stay on top of your student loans, visit the Money section of our blog.
