Refinancing is a popular alternative for students looking for a way to get better terms on their student loans. Unfortunately, there are many myths that prevent students from pursuing option. These are some of the more common student loan refinance myths that are just that – myths.

Myth #1- Refinancing is the same as consolidation

This is one of the most widespread myth related to student loan refinance. Refinancing and consolidation are in fact two completely different things.

Consolidation is a federal process. It involves combining multiple federal student loans into one consolidated loan. The interest on the new loan is calculated as the weighted average interest rates of the combined loans. Consolidation doesn’t offer any money-saving benefits. The only benefit is that it makes it easier for students to manage their loan payments.

Refinancing is only offered by private lenders such as banks and credit unions. It involves exchanging your current student loans for a brand new private loan. The new loan has completely different terms and a different interest rate too. You can refinance one loan by itself or you can combine multiple student loans together. The biggest benefit of refinancing is the potential to save money if you qualify for a lower rate. The other benefit is the ability to change the terms of the loan.

Myth #2 – You cannot refinance federal student loans

You can refinance both federal and private student loans. What got this myth started is that the federal government does not offer refinancing. Only private lenders do. The fact is you can refinance federal student loans but can only do it through a private lender. You can refinance federal student loans by themselves or combine them with private student loans and refinance. The important thing to note is that federal student loans get converted to private loans when you refinance.

Myth #3 – Refinancing is an expensive solution to managing student loans

Refinancing should not cost you anything. Most lenders don’t charge any origination, disbursement, or other fees to refinance student loans. A few do though. They offer rock-bottom interest rates and make up for it by charging additional loan fees. When looking for a refinance lender, look for one that doesn’t tack on additional fees.

Myth #4 – The refinancing process is tedious and time-consuming

Not at all. You can fill up and submit a student loan refinance application online. This shouldn’t take you more than 15 minutes provided that you have all the documentation handy. The lender will review your application and get back to you usually in a few days. Most lenders also offer an instant prequalification facility online that allows you to check your rates within minutes. The only time-consuming part of the whole process is the time spent looking for the right lender.

Myth #5 – You must refinance all student loans together

No, you don’t. You can refinance only one loan by itself if you want to. Alternatively, you can choose a partial student loan refinance where you combine and refinance only some of your student loans. The third option is to combine and refinance all of your student loans together. This is great as you can mix and match the loans in a way that maximizes the benefits over time.

Myth #6 – Private lenders offer no flexibility when you refinance student loans

All lenders offer a fair amount of flexibility in choosing student loan refinance terms. For example, you can choose from loan terms of 5, 10, 15 or 25 years. Some lenders will also offer you a choice of fixed or variable interest rates. It’s because private lenders offer a lesser degree of flexibility than federal lenders that this myth continues to perpetuate.

Myth #7 – You need a cosigner to get approved for student loan refinance

Having a cosigner is not a mandatory requirement for refinancing student loans. If your credit is in good standing, you’ll qualify for refinancing on your own credentials without a cosigner. You only need a cosigner to get approved if your credit is low. In this case, the lender will assess the cosigner’s creditworthiness to determine approval.

Myth #8 – You should never refinance federal student loans

Whether or not you should refinance federal loans depends on your financial circumstance. Federal student loans come with some powerful protections such as income-based repayment plans, deferment and forbearance options, and forgiveness programs. However, these may not be as useful for you as for other borrowers. Keeping your original federal student loans only helps if you’re going to make use of the benefits. If not, it’s better to refinance the loans as soon as you qualify for a lower interest rate. This can help you save thousands by way of the lower accrued interest.

Myth # 9 – Student loan refinance is a one-time deal

Not at all. You can refinance student loans multiple times, that too without incurring any administration fees. A good strategy is to refinance as soon as you qualify for a lower rate of interest. Even a marginal drop in the rate can potentially save you thousands of dollars in interest. When the markets drop or when your finances are stronger, you’ll likely get an even lower rate. You can then choose to re-refinance your loan for even more savings.

Myth #10 – Some private lenders offer loan forgiveness on refinanced loans

No private lenders offer loan forgiveness options on refinanced loans. Loan forgiveness is a benefit associated only with federal student loans. When you refinance federal loans they get converted to private student loans lose all benefits associated with the original loan. Private lenders do not offer any of the built-in protections that come with federal student loans.