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The International Student Blog

Benefits to Refinancing Your International Student Loans 

Posted on June 30th, 2022 by Bryanna Davis

If you have a sizable student loan and are looking to reduce the amount of interest you pay, you might be wondering, Should I refinance my private student loans? The answer isn’t always clear-cut, but there are many reasons to consider refinancing — including possibly qualifying for student loan repayment programs, releasing your cosigners and simplifying your repayment.  

Here are a few of the top potential benefits of refinancing your student debt in the U.S.: 

Qualify for Student Loan Repayment Assistance

Many companies now offer student loan benefits to their employees. To help you pay off your loans, these companies will match a portion of your student loan payments — up to US$5,250 per year tax-free. 

Although not all international student loans will qualify for assistance through an employer, there is a workaround: You could make your loan eligible by applying to refinance it with a lender in the United States. 

Your international student loans are replaced with a single loan when you refinance. When choosing a lender in the U.S., your new loan may be eligible for employer-sponsored student loan assistance, and you could pay back your debt faster as a result. 

Get a Lower Interest Rate 

One big benefit is that refinancing private student loans allows borrowers to get a lower interest rate when available. If you’re a borrower who qualifies for a better rate than what you currently have, you could reduce the amount of interest you pay by hundreds or even thousands of dollars over the life of your loan. 

For example, let’s say you owe $35,000 in student loans at a 11.00% interest rate over the next 10 years. If you can bring that rate down to 7.99%, it could reduce the amount of interest you pay by almost $7,000 over 10 years. Your monthly payment would also go down by $58. 

Not only can refinancing lower your interest rate and reduce the amount you pay over the life of your loan, but it can also help lessen the burden of your monthly repayments.  

Build U.S. Credit 

Having a strong credit score in the U.S. is important — it’s often required to take out a loan, open a credit card, or even rent an apartment in some cases. Your credit score is established around your history of managing debts, among other factors. For example, a credit score can be maintained or improved by paying your bills on time; it can also decrease when payments are missed or you have a high amount of debt. 

International loans are not taken into account when it comes to your U.S. credit score; it’s entirely dependent on U.S.-based financial activity. This means individuals who immigrate to the U.S. from another country must start building their credit from scratch, regardless of their credit score in their home country. 

Refinancing your international student loans in the U.S. allows you to start building your credit history. If you make on-time payments you’ll see your credit score begin to improve over time. A strong credit score means you will have an easier time qualifying for loans, credit cards, and other financial products in the United States. 

Release Your Cosigner or Collateral  

When a cosigner joins a loan, it means they’re on the hook for the borrower’s debt. When a borrower fails to make payments, the lender could demand repayment from the cosigner. If you have collateral attached to your international student loan and you don’t pay, a lender could consider your loan in default and initiate a process to seize these assets.

As such, many borrowers choose to refinance so they can release their collateral or cosigner from their loan. Cosigners are often family members, and borrowers are eager to free them from the burden of their loan.

While some refinancing lenders require international graduates to apply with a U.S.-based cosigner, MPOWER Financing lets you apply on your own.

Make Payments With Ease

If you’re living in the United States, refinancing with a U.S.-based lender could make your student loan repayment easier since you’ll no longer have to deal with: 

  • Currency exchange rates
  • International transfers
  • International banking fees 

You could also gain additional benefits, including the ability to pause payments through forbearance or deferment if you run into financial hardship or the ability to prepay your student loans without penalty. When making a decision to refinance, you should consider the options and benefits you already receive through your current loan with the potential payment options offered by the refinanced loan. Comparing the additional benefits of lenders that offer a refinancing option allows you to potentially find one that can lower your payments and provide a positive experience overall. 

Last Glance at Refinancing 

Want to become financially independent? Refinancing your student loans with a lender like MPOWER Financing could help you get there since MPOWER doesn’t require you to have a cosigner. Applying to refinance your international student loans with a lender in the United States offers a variety of potential benefits, from reducing the amount you pay in interest to helping you build your U.S.-based credit history. 

At the same time, keep in mind that if you refinance your international student loan in the U.S., you’ll no longer hold a student loan in your home country. If your current lender offers any benefits that you don’t want to sacrifice, you might be better off leaving your student loans as they are. 

If the benefits of refinancing your private student loans in the U.S. outweigh the downsides, it’s an option that could help you better manage your education debt. 

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