What is Refinancing?

What is refinancing and how does it work?

Usually after people refinance a loan, we hear “Why was that so easy?” The truth is that the process is fairly straightforward.

On a basic level, you’re taking out a new loan to pay off your old loan. With student loans, you have the power to consolidate many into one single loan, usually for a lower overall cost.

Since you’re employed and are perceived as ‘less risky’, your new loan ideally has a lower interest rate, saving you money in the long run.

Refinancing is great for people with high-interest student loans, especially private ones. Right now, federally held student loans aren’t incurring any interest until September 1st, 2023. As a result, borrowers with federally held loans are largely waiting until then before considering refinancing.

For private loan borrowers, there’s little downside associated with refinancing, and a large potential upside in terms of savings, and reducing your monthly payment. If you have both federal and private, know that you may consider only refinancing private loans at this time, which is an option that many Juno members opt for. You're free to refinance whichever assortment of loans you choose without being forced to refinance all at once.

Note that you may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options common with federal loans. If you file for bankruptcy, you may still be required to pay back this loan.

If you can answer these ten questions, you can probably go get customized rates within 5 minutes:

  • Name
  • Email Address
  • Citizenship status
  • Degree
  • Graduation date
  • School name
  • Student loan balance
  • Income
  • Rent/mortgage payment
  • Address

Then you can use a calculator to decide if the amount you'd save is worth proceeding. 

That said, you should always consult a financial advisor before taking any action. This article is not intended to be financial advice, and we urge you to do your own research independently.

Juno Team

Written By

Juno Team

Juno came into existence to help students save money on student loans and other financial products through group buying power by negotiating with lenders. The Juno Team has worked with 90,000+ students and families to help them save money.


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