Why does my lender want me to refinance my student loan?
I keep receiving mail from my lender telling me to refinance before July 1, when the rate on my current, adjustable rate student loan will increase. I understand how this benefits me, but what does my lender get out of the deal? Why are they advertising this? Do they expect rates to drop enough over the course of the loan that I would be better off sticking with the adjustable rate?
If you refinance, the place refinancing your loan will pay off that lender in full and free up that money for them to use for a higher rate loan somehwere else. They are also trying to do you a favor. You don’t have to refinance if you don’t want to, but with an adjustable, why not lock in a rate?
