Should you refinance your student loan with a US-based lender after graduation?

As an international graduate, you may have taken student loans from a bank in your home country to fund your overseas education. For international graduates who choose to live and work internationally, having to deal with education debt in another country can be challenging for various reasons, causing stress.

Here are a few tips and tricks to potentially reduce your interest rate, eliminate the inconvenience of international loans, and release a cosigner by switching to a lender in the U.S.

Most Indian students have traditional variable-rate loans. These loans have rates that change with market interest rates, which are beyond the control of both the student and the lender. A variable rate can go up or down over time, often resulting in unpredictable monthly payments and interest charges.

Even if your variable rate starts out low, it can increase over the years, making your loan much more expensive. As inflation rises across the globe, your variable rate is likely to go up, leading to higher interest charges and increased monthly payments on your student loans. Plus, it can be difficult to budget for your monthly student loan payments or estimate your long-term costs if they keep changing.

Fixed-rate loans offer several advantages, including predictability and a constant rate of interest in a rising interest rate environment. Since the interest rate is fixed and doesn’t fluctuate, EMIs are constant and students can plan their expenses in advance. This is not a major issue for short-duration loans, but the effect can be substantial for longer-term loans – such as those used to pursue an overseas education. Therefore, fixed-rate loans provide long-term security by protecting students from higher EMI payments following interest rate hikes.

Even though you are the one taking out the loan for your education, your cosigner is equally responsible for the debt. Once you graduate and start working, you might want to remove this burden from your cosigner and assume full responsibility for your loan. Refinancing your student loan in your own name is one way to release your cosigner, but many refinancing lenders in the U.S. make it difficult for international graduates to qualify on their own. Identifying the right lender could help you release your cosigner and reduce the burden of student loan debt.

While paying back international student loans from your home country can be challenging, it doesn’t have to stay that way. By exploring your options for student loan refinancing, you could eliminate these inconveniences and simplify your debt repayment.