Student loan refinancing has become a go-to solution for many student loan borrowers, as it provides a means to lower the total cost of borrowing over time. In a low-interest rate environment, private lenders may be able to offer highly qualified borrowers a lower rate than federal student loans or previously refinanced debt.
Additionally, student loan refinancing can lower monthly payments for some borrowers who have a large amount of debt through an extended repayment term. Student loan refinancing is available through many different private lenders, including Brazos Student Finance Corporation.
Brazos is a nonprofit corporation that has been working to help student loan borrowers with their refinancing needs for the past 40 years. Here’s a look at what Brazos offers and how it works.
Refinancing Your Student Loan
Student loans, either federal or private, may be refinanced through Brazos. The refinance process begins with an initial application, submitted online, where borrowers provide information about their total student loan debt, current or prospective income, credit history and score – plus other financial factors like consumer debts or mortgage obligations.
Borrowers must have graduated and received at least an undergraduate bachelor’s degree from one of more than 2,000 eligible schools to qualify for a refinanced loan. They must also be at least 18 years old and a resident of the state of Texas. Borrowers must be employed or self-employed when they submit an application. Otherwise, they must have an offer in writing to start employment within 60 days.
Brazos does have minimum income requirements for borrowers as well. It must be able to verify at least $60,000 in earned income – or $30,000 if a borrower plans to use a cosigner on the application. The minimum loan amount for a Brazos refinanced student loan is $10,000, with a maximum of $150,000 for borrowers with a bachelor’s degree. The maximum is $250,000 for those with a graduate, law, medical, or professional degree.
All borrowers are required to provide proof of Texas residency, proof of income, and a recent statement for all student loans included in the refinance.
Currently, Brazos offers student loan refinance options with both fixed and variable interest rate options. The lowest fixed interest rate is 3.15%, while the lowest variable interest rate is 2.58%.
Borrowers may select a repayment term of five, seven, 10, 15, or 20 years, although interest rates on both the fixed and variable side are higher the longer the term. Brazos also offers an interest rate reduction of 0.25% for borrowers who establish automatic monthly payments from a checking or savings account.
There are no origination fees or prepayment penalties with a Brazos refinanced student loan.
How Does Brazos Compare to Other Lenders?
Compared to other private student loan lenders that offer refinancing options, Brazos has slightly lower interest rates available to the most qualified borrowers. The repayment term options are similar to comparable private lenders, although other providers do extend repayment up to 25 years for some refinanced loans.
Additionally, the automatic payment discount from Brazos is in line with other private loan organizations. Because there are no origination fees and no prepayment penalties, Brazos is cost-effective for borrowers who are interested in refinancing their student loans.
However, borrowers who use a cosigner to qualify for a refinanced student loan initially do not have the option to request a cosigner release at any time during repayment. Some student loan providers do offer a cosigner release after a certain number of payments have been made.
Reducing Your Student Loan Payments
Refinancing student loan debt is a beneficial tool in reducing student loan payments for borrowers who qualify, but it can be a challenge to know which private student loan lenders offer the best deal. To evaluate a private student loan lender, be sure to review its interest rates, both fixed and variable options, as well as the repayment terms offered.
It is also important for borrowers to look at the fees charged for refinance applications, loan funding, origination, or prepayment penalties, as these can add a significant cost to the loan. Reviewing a lender’s policies on deferment, forbearance, and other repayment features is also necessary in order to make the most suitable decision.
Student loan borrowers can use refinancing to manage their student debt more effectively, but this is generally only the case when a longer repayment term or a lower interest rate is available. Borrowers with federal student loan debt may benefit more from consolidating their public student loans or evaluating their options for an income-driven repayment plan to lower their monthly payment.
Author: Jeff Gitlen
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