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Is it worthwhile to refinance a student loan? What are the best refinancing options?
A student loan refinancing means that you pay off your previous student loan with a new loan at a lower interest rate from another lender. If you had a student loan from a bank before you started school, you are charged interest rates based on your future potential and possibility of payment after you graduate with a job. But after you graduate and secure a full time paid job, your risk of default is much lower compared to when you took the loan. At this stage, you can take a new loan to pay off your previous higher interest loan. Since you are now a lower risk, your interest rate will be lower.
Historically, student loan refinancing was only available for US citizens because of government policies and their current business models, and most banks and financial institutions still do not refinance student loans for F-1/OPT/H-1B visa holders, although several companies do offer refinancing options.
If you are currently working full time with a valid visa and don’t have defaults or delinquencies on previous credit cards or loans, you may be eligible to refinance your student loans.