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Improve your Debt-to-Income Ratio

A low debt-to-income ratio will also help your case for refinancing. You can calculate that ratio by adding up your monthly minimum loan payments and dividing those by your monthly gross income. A ratio of 43% or less is good, but lower is always better.

The hardest criteria to overcome is income. A low income may disqualify you, even if your credit score is stellar and you have no other loans. The only way to fix this is by asking for a significant raise, getting a new job or adding a part-time gig.

If you are self-employed or work as a contractor, you may have more trouble getting approved than someone with a more traditional employment situation. Getting a cosigner may be the only option if your income is too low to qualify.

Should I Refinance My Student Loans?

As always, consider the pros and cons of refinancing student loans. If you have federal student loans, you’ll lose the perks that go along with federal loans. These include an option for student loan forgiveness, possible widespread loan forgiveness, income-driven repayment plans and generous deferment and discharge options in times of unemployment and economic hardship. For high-interest private student loans, it could help you lower your interest rate and save money.

If you have decided that student loan refinance is right for you, check out our list of the best lenders to refinance student loans.

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At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.


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