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Anyone who’s been to college knows It’s always a good idea to have a backup plan. Whether it’s applying to more than one school, being open to multiple career paths after graduation, or looking at several homes before buying—almost everyone taps into their backup plan at least once in life.
When it comes to getting rid of that pesky student debt, student loan refinancing is one of the more attractive options. Many borrowers have used a student loan refinance to get a lower interest rate and lower monthly payments, making it easier to reduce and ultimately get out of debt.
Refinancing is a good way of handling student debt In some circumstances, but it definitely isn't the only option, and you can check and see if maybe a personal loan may be the way to go.
Read on for our comparison of student loan refinancing vs. personal loans.
Overview of Personal Loans
Pros | Cons |
|---|---|
Prequalification is widely available (soft credit check) | Higher personalized prequalified rates |
Consolidates everything into a single monthly payment | Interest isn’t tax-deductible |
No obligation to use entire funds to pay off debt | Loss of rights attached to federal student loans (if used to pay off federal loans) |
A personal loan is a fixed-rate unsecured loan that may be used for virtually any purpose, including credit card consolidation, home improvements, paying off an emergency expense, or consolidating student debt, subject to lender restrictions—many lenders prohibit post‑secondary education uses or paying off student loans. Although a personal loan may be used to pay off student debts, it isn’t technically a refinance because it doesn’t involve having a lender take on your debts. A personal loan works like this: the lender transfers you a lump sum, you pay the lender back in monthly installments over a pre-agreed term (e.g. 5 years), and you get to use the sum however you want (subject to lender restrictions). Technically, you can use the sum however you want. If you have $25,000 in student debt, there’s nothing stopping you from applying for $30,000 and using the remaining $5,000 for another purpose (subject to lender restrictions).
Personal loans do have several drawbacks. Even borrowers with very good or excellent credit often see APRs around national averages (roughly low double digits as of late‑2025), whereas top student loan refinance providers advertise starting APRs in the mid‑single digits for highly qualified borrowers. Using a personal loan to wipe out federal student loans means giving up on all the benefits of federal student loan debt, such as: the ability to deduct up to $2,500 of qualified student loan interest from your income (subject to eligibility limits); having the option of applying for deferment or forbearance, and having the option of applying for loan forgiveness.
Top Personal Loan Providers
Credible
- No hidden fees
- Get personalized prequalified rates in minutes¹
Credible is an online personal loan brokerage service. It is perfect for anyone with a high credit rating looking to consolidate debt, finance a major purchase, or open a business. They provide fast initial responses, ideal for anyone who needs a loan and doesn’t know where to start.
LendingTree
- No fees
- Large network of reliable lenders
LendingTree lets borrowers take advantage of the competition between personal loan lenders to access better terms, personalized prequalified rates, and loan amounts, even if you have poor credit. It gives customers the ability to compare offers simultaneously, empowering them to make the right decision based on their unique circumstances.
Read the full LendingTree review
Overview of Student Loan Refinance
Pros | Cons |
|---|---|
Lower personalized prequalified interest rates | Eligibility requirements are stricter (many lenders target 650–680+ credit) |
Consolidates everything into single monthly payment | Loss of rights attached to federal student loans (if you refinance federal loans with a private lender) |
Option of dropping previous cosigner from loan | Application can impact credit score |
A student loan refinance involves replacing one or more federal and/or state and/or private student loans with a single new loan from a private lender. With excellent credit, you may be eligible for a student loan refinance with an APR starting around 3.99%–4.24% (as of early 2026; subject to change). The larger your debt and the longer the repayment term, the greater the savings you can accrue by securing a lower rate.
Why wouldn’t everyone choose a student loan refinance? Quite simply, it’s not that easy to qualify. Although official figures are hard to come by, many private refinance lenders look for good to excellent credit and strong income. If you have a 680+ credit score and a strong salary, you may qualify. If you have sub-620 credit and below-average income, a student loan refi probably isn’t a viable option.
Top Student Loan Refinance Options
Credible
- Compare different loan options
- No fees
In addition to being a leading option for personal loans, Credible offers competitive personalized prequalified rates for student loan refinancing as well. It is a loan marketplace working with well-known and reliable loan providers in the industry. With a modern approach to student loans and outstanding customer service, Credible is an ideal solution for those who want to weigh their options.
Splash Financial
- No application fees
- No prepayment penalties
Splash Financial is a rookie player making home runs with student loan refinancing. It offers low personalized prequalified rates, an easy to navigate website, flexible repayment schedules and special personalized prequalified rates for medical residents.
Read the full Splash Financial review
For other top lenders, visit our comparison chart.
How to Decide Between a Student Loan Refinance or Personal Loan
The correct answer to “student loan refinance vs. personal loan” depends more on your financial position than personal preference. A student loan refinance is great for those able to qualify, but it is quite an exclusive club.
So, if your credit score and financial position are far better today than they were when you took out your student loans, you may want to consider applying for a student loan refi. If you took out a loan 10-20 years ago when personalized prequalified borrowing rates were much higher than they are today, the odds are a student loan refinance will greatly reduce your rate. Even if you took loans in the last decade, if your financial position has since improved, then you may be able to get a superior rate today.
If you have student debt and find yourself unable to qualify for a student loan refinance, a personal loan is one of the many alternatives to getting out of debt. It’s quick and easy to qualify for a personal loan. Most lenders have minimum credit scores of around 580-640, covering the majority of borrowers. Although the average personalized prequalified rates tend to be in double digits, the top personal loan providers offer APRs as low as about 7.99% (subject to change). Online marketplaces like Credible and LendingTree let you compare personalized prequalified rates from multiple lenders in minutes without impacting your credit score.
Summary
According to the latest report from the Federal Reserve Bank of New York, Americans hold about $1.65 trillion in student loan debt. There are many causes behind this spiraling student debt, one of which is a reluctance of debt holders to refinance or consolidate.
Most people sign up for student loans from age 18 to their early-20s when they have little to no credit history and have to rely on a parent or cosigner to help them get a loan. If you’re still struggling with student debt years after graduation, there is more than one way out.
If you have a federal loan and meet certain conditions, you may be able to have the loan forgiven altogether. For most people, a student loan refinance or personal loan are 2 ways of making it easier to pay off that debt.
Want to do some more research? Feel free to check out the rest of our articles and lender comparison chart.
Disclosure
¹ Requesting prequalified rates on Credible is free and doesn't affect your credit score. However, applying for or closing a loan will involve a hard credit pull that impacts your credit score and closing a loan will result in costs to you.
Written byNadav Shemer
Nadav Shemer is an insurance expert at BestMoney.com, with a background in financial journalism, hi-tech, and startups. He has covered business, tech, and energy for various publications and enjoys exploring the latest innovations in insurance to help readers make informed decisions.