Refinance Student Loan to start fresh?

[FirstAscent]

Hello all!

I currently have 4 student loans totalling about $26000, original amount was only about $21k so there's been a lot of interested capitalized over the years. I also have a lot of late payments over the years on these: 8 in 2013, 1 in 2014, 8 in 2015, 0 in 2016, and 3 in the first three months of 2017. I'm on the right track now but obviously have made mistakes in the past. My interest rate is 6.5%, so not horrible but not great either.

My question is does it make any sense to refinance in the near future (after I get my scores a little higher) in the sense of closing these existing accounts with all the late payments and having a new fresh account with only good on-time payments? From a payment standpoint a better interest rate is nice but I'm more concerned directly with any potential affects to my credit and rebuilding process. 

Or should I just keep chugging along as usual with on-time payments?

[Anonymous]

Even if you get a new loan, the lates will show on the old account.  Are the loans Federal loans? if they are, i would leave as they are.  They are better protected than in a bank loan.

[FirstAscent]

Thanks for your response, yeah I know they would still show on the old account if I refinanced but i wasn't sure if it would help that I had a new "clean" account. But yes they are Federal loans, when you say better protected do you mean from FICO scoring or something else?

Thanks!

[Anonymous]

https://studentaid.ed.gov/sa/types/loans/federal-vs-private

Federal student loans include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans. In contrast, private loans are generally more expensive than federal student loans.

[Anonymous]

Just pay on it forever.  Lates will drop off at some point, and you will end up with a 20-30 year old credit lline.

[FirstAscent]

Thanks everyone, I think for now I'll just continue to pay on it and wait for the lates to come off. However, once my credit continues to get better and my scores go up I think I'll eventually refinance for a lower interest rate, but not for at least another year or so.

Thanks for your input!

[Anonymous]

When I was first starting out I made major mistakes with my student loans as well but imo it's kind of like you get to a point where you just know you have to do better. I think it's braver of you to make this step.
One hard lesson I have seen others learn though is to get too focused on interest rates. Yes, you may pay a bit more in the long run but I've found that you never know what the future holds. Despite your best intentions sometimes things happen like losing your job or an extra expense somewhere; you will find that the goverment student loans can be extremely forgiving. In addition to several income-driven plans they also have loan forgiveness. You pay on your loans for 20 years or less and the rest is forgiven. It only starts when you apply though. The interest is also only capitalized when you change plans so your credit report balance stays the same.

[Anonymous]

Agree with above, that is why i never refinanced mine and never will.  

[Sneakytiki]

OP, do you have a servicer for those Federal Loans? Some companies will remove lates via GW (Goodwill) letters. I had a federal loan serviced by Sallie Mae, now Navient, and they removed dozens of 30, 60, 90, 120+ day lates from my account after I made 1 year of on time payments. My 3 private loans with them were in default (at least according to them) and the federal loan was close,  after one year the 3 private loan lates were removed and the federal loan lates that they serviced were removed about 4-6 months later via GW or maybe they were just being nice. I really wasn't tracking at the time and noticed way after the fact after bombarding them for awhile. All the late spots are now blank with nothing reported or no data. 

Might be an option but it has been done and that will help your scores. The only federal loan refinance I did was consolidating my loans into another giant federal loan. It helped for like a year and then just started capitalizing interest like the old ones and it seemed to grow faster.