Is Refinancing Existing Private Student Loans into a new loan the Right Choice?

When considering the option to refinance existing private student loan(s) into a new SunTrust private student loan, SunTrust wants to ensure you've thought through potential considerations of doing so. Our goal is to offer a refinance option that provides a clear, tangible net benefit.

Before deciding to refinance your existing private student loan(s) into a new loan.

Please compare your existing private student loan(s) to the new loan (current interest rate, monthly payment amount, repayment term, total loan cost, relief benefits such as military benefits, etc.) to help determine if this is the right choice.

Potential impact of refinancing & what should be considered

Single monthly payment

When your existing private student loan(s) is refinanced into a new SunTrust private student loan, monthly payments are combined into one payment. The repayment term and interest rate of the new loan should be compared to the existing private student loan(s) that you are considering refinancing.

New interest rate

With a new SunTrust private student loan, you can refinance your existing private student loan(s) at a new interest rate. Be sure to compare the interest rate on the existing private student loan(s) to the interest rate being offered on the new loan.

Different monthly payment

The two most common ways to lower monthly student loan payment(s) through refinancing are to:

  1. choose a loan that has a lower interest rate, or
  2. choose a loan that gives you more time to repay the loan
If a new SunTrust private student loan extends the repayment term, but the interest rate is not lower than the existing private student loan(s), it is likely that more interest will be paid over the life of the loan.

Keep in mind — the repayment option that you choose for the new SunTrust private student loan will apply to the existing private student loan(s) that you refinance. Thus, if payments on the existing private student loans(s) are currently deferred, choosing a repayment option other than deferment on the new loan will require you to make principal and interest, interest only, or partial interest payments (depending on which repayment option you choose) while you are in school.

If you choose a repayment option other than immediate or interest only repayment, unpaid interest that accrues during the deferment period will be capitalized upon entering repayment, which will cause more interest to be paid over the life of the loan. This could result in a higher monthly payment than you have on your existing private student loan(s).

Change in repayment term

When a longer repayment term is chosen through refinancing, it is likely that more interest will be paid over the life of the loan unless the interest rate is significantly lower.

Conversely, when a shorter repayment term is chosen through refinancing, it is likely less interest will be paid over the life of the loan unless the interest rate is significantly higher. With shorter repayment terms, consider the monthly payment — shorter repayment terms carry higher monthly payments.

Lock in a fixed interest rate or refinance at a variable rate

By choosing a fixed interest rate, the interest rate and monthly payment on the new SunTrust private student loan will be constant throughout the life of the loan.

By choosing a variable interest rate, the interest rate on the new loan will be based on the 1-Month LIBOR index and will fluctuate throughout the life of the loan. The monthly payment on the new SunTrust private student loan will fluctuate based on changes in the 1-Month LIBOR index.

Refinance without a cosigner or with a new cosigner

If the cosigner on your existing private student loan(s) being refinanced is not the cosigner on the new loan, that cosigner will be relieved from the debt obligation, which typically improves the cosigner's debt to income ratio.

Other

There are other considerations to think about and we strongly encourage you to compare what SunTrust is offering with a new private student loan and what you're currently being offered.

  • The terms of the new loan may not be advantageous if your credit has undergone significant negative changes since you applied for your existing private student loan(s).
  • If your existing private student loan(s) has options that reduce the interest rate, or save you money through rewards, those will be lost if the loan is paid off by the new loan. If your existing private student loan(s) did not offer these, or you lost the benefits, this may not be a consideration.
  • If you are currently receiving relief in the form of a 6% interest rate cap on an existing private student loan(s) pursuant to the Servicemembers Civil Relief Act, by choosing to refinance such loan(s), that benefit will be discontinued, although the loan may continue to be eligible for relief in certain circumstances:
    • If you are a resident of Louisiana, Ohio or Pennsylvania and are on active duty
    • If you are a resident of Louisiana or Ohio and your spouse is a qualifying servicemember
    • If the cosigner is a resident of Louisiana, Ohio or Pennsylvania and is on active duty
    • If the cosigner is a resident of Louisiana or Ohio and his or her spouse is a qualifying servicemember

This is an important decision and shouldn't be taken lightly.

SunTrust is here to help throughout the entire process. For more information, or to speak to a Customer Service representative, please call the phone number for the program you're interested in, as listed below:

  • Custom Choice Loan® - 866.232.3889
  • AAA Advantage Loan - 800.513.1464
  • Union Federal® Private Student Loan - 866.513.8445
  • Graduate Business Loan - 866.232.3889

Paying for college can be a challenge. SunTrust can help navigate the options.

  • Money Management

    Before you look into paying for your college expenses, it's important to know how much money you'll need. Our money management resources, tools, and budgeting tips can help.

  • Financial Aid Tools

    Use our college tuition guide and step-by-step guide to paying for college for planning advice on how to avoid getting too over-burdened with debt before you've earned a degree.

  • Scholarships & Grants

    Before you get a loan, we encourage you to try getting scholarships and grants first. Our list of online resources can help. You can also register for the SunTrust Off to College Scholarship Sweepstakes (see Official Rules for details).