If you’re finding it difficult to keep up with your student loan payments, refinancing your student loans could help to reduce those monthly bills.

A student loan refinancing usually occurs in one of three ways:

• you obtain a new student loan with a lower interest rate
• you extend the term, or length, of your current student loan(s)
• you consolidate student loans, sometimes by adding a new loan to the mix

Under all of these scenarios, refinancing a student loan usually involves taking out an entirely new loan (or loans) in an effort to achieve a goal.

Your goal may be to lower your monthly payments, decrease the amount of interest you’re paying over time, or to simply combine a bunch of unwieldy student loans into a single payment.

Whatever your goal, if you have good credit and a decent track history of making payments on time, you should be able to refinance your student loans and free up some extra cash each month.

Student loan rates vary by lender and you will need to refinance your private and federal student loans separately.

But here are six useful tips for refinancing your student loans:

1- Ask your current lender about options.

Before you start shopping rates for a student loan refinance, ask your present lender if they offer loan consolidation or refinancing options.

Lenders may work hard to keep your business and they may be able to offer you an attractive rate so you don’t end up taking your loans elsewhere.
 
In many cases, though, realize that existing lenders won’t be in any hurry to lower the rates on your student loans.

That’s because they’ve already got you locked in, so lowering your interest rate would be eating into their profits.

2- Talk to a community bank.

Sometimes smaller banks in your local area can offer better rates and customer service. Don’t be afraid to talk to some community banks in your area to find out what you are eligible for.

Even if some don’t offer loan consolidation or an attractive rate, they could still be a good source of referrals.

3- Check with the government for federal loan options.

You may be able to find some attractive loan refinancing options for your federal loans directly with the U.S. Department of Education.

Use the Federal Direct Consolidation Loans Online Calculator to find out what your payments might be if you consolidated your subsidized and unsubsidized loans.

4- Consider the limitations of the federal Perkins loan.

These loans are granted based on need, and choosing to refinance this loan could mean you lose some of the loan benefits.

So review the loan agreement and fine print on your contract to determine whether there really are any benefits of consolidating this type of loan.

5- Create a comparison chart of potential lenders or loan options.

Do a simple Google search with the term “student loan consolidation” or “refinance student loans” and you’ll come up with a list of possible lenders.

You can then call or go online to get more information from a few lenders to find out what the refinancing/loan qualifications are, and whether you meet their balance requirements.

To consolidate private loans, for example, lenders will typically require your loan balance to be at least $5,000 to 10,000.

6- Review all fees and prepayment penalties.

Make sure you’re aware of any origination fees, prepayment penalties, and the maximum interest rate of the new loan when you are considering a loan consolidation.

Your lender should be able to explain all of the terms of the new loan, and outline exactly what types of fees you will be responsible for.

Take the time to read through all of the fine print so you are completely comfortable with the new agreement and payment arrangements.

If you do think you’ll be able to pay off the loan early, make sure you’re comfortable with paying any prepayment fees that may be imposed.