What if there was a way to cut the cost of your outrageously priced student loan?

But thats not necessarily the whole story.

Heres everything you should consider before refinancing.

Youve probably heard the termrefinancingbefore.

Theres mortgage refinancing, car loan refinancing, and yes, student loan refinancing.

A private lender takes over your student debt, and you get a brand new loan.

NerdWallet crunched some numbersand figures the average student loan borrower could save about $1,145 by refinancing.

If you knowanything about compound interest, you know interest adds up fast.

A new rate could make a big difference.

Are You Okay With Losing Your Federal Loan Options?

Your federal loan comes with afew relief optionsif financial times get tough.

Deferment and Forbearance: Your payments are postponed for a period.

Federal Student Loan Forgiveness: In special cases, loans are completely forgiven.

Weve written abouthow these options work.

Youre probably thinking,how is this different from refinancing?

So yes, consolidating a private loan could also mean you incidentally refinance it.

Generally, it’s crucial that you have strong credit and a somewhat high, steady income.

Education refinancing requires steady income and a high credit score.

The company has never had a client default.

It makes sense, though.

If a lender is willing to cut your rate, theyre want to verify youre going to pay.

Also, some lenders only offer refinancing options for Bachelors or Graduate degrees.

Of course, your eligibility may vary depending on the lender.MagnifyMoney has a list of lenders and their requirements.

You must make at least $24,000 per year.

They offer fixed rates starting at 4.74% and variable rates from 2.33%.

Help

This service will find a community bank.

Community banks can actually be expensive.

Fixed rates are available, starting at 6.22%.

Upstart

you better have a degree (or be graduating within 6 months).

A minimum FICO of 640 is required.

Fixed interest rates starting at 5.7%.

This is more of a traditional personal loan than a long term student loan refinance.

Cosigning isnt for everyone, but its an option nonetheless.

Decide on Your Terms

Lets say you are eligible and youve decided refinancing is right for you.

Great; now its time to pick and understand the terms of your new loan.

Variable Rates

The lender will probably offer either a fixed or variable rate option.

Fixed rates are usually a bit higher, because they stay the same for the life of your loan.

Variable rates are lower, but a little riskier.

You might even pay more than you would have with a higher, fixed rate; you never know.

Are you up for that risk?

Youll have to decide for yourself.

The longer it takes you to pay it off, the more youll end up paying in interest.

However, if your loan term is short, your monthly payments will be higher.

Most lenders offer different options: 5, 10, or even 20 years.

Either way, know your options and weigh them with your income to decide whats best for you.

Protections and Discounts

Find out what happens if you have trouble paying back your loan.

Additionally, they suggest checking for any discounts.

Some lenders will give you a break on your interest rate if you use their auto-pay option.

Youll also want to find out how they handle extra monthly payments beyond the minimum.

Correcting this is probably as simple as a phone call or writing apply to principal on the check.

Still, you want to know how they handle this.

Refinancing can definitely save you some cash, but you have to know what youre getting into.