What is Student Loan Refinancing? 

A student loan refinance involves replacing one or more student loans with a new loan with better terms from a private lender. Both private and federal student loans can be refinanced. The purpose of refinancing is to get a lower interest rate and thereby reduce the monthly payments and lifetime costs. Many private lenders, including banks, online lenders, and credit unions offer student loan refinance loans. People with federal loans can also consolidate—rather than refinance—their debts. This involves combining multiple federal loans into a single loan with one simple monthly payment. The table below shows a sample of rates for student loan refinances compared to rates for first-time private and federal student loans. The Refinance column shows the lowest rates advertised by each lender. The First-Time Column shows fixed rates for federal government loans and lowest rates from private lenders.

Should I Refinance my Student Loan?

As the above table shows, it is often worth refinancing a student loan. If you’ve graduated from college and have built a good credit score, then you can achieve a much lower interest rate by refinancing—and potentially save thousands of dollars in the long run. 

Things to take into consideration before refinancing:

• Interest rate. Some lenders offer lower rates than others. Before you refinance, make sure your chosen lender can actually save you money.
• Credit score. Holders of student debt can refinance at a significantly reduced rate, so long as they have a solid credit score along with steady income and employment. If your credit score is poor, you may find it more difficult to achieve a reduced rate.
• Term duration. If you refinance at a lower rate but with a longer loan, then your monthly payments decrease, but you may end up paying more overall due to accruing interest.
• Remaining debt. If you’re fresh out of college and tens of thousands of dollars in debt, then a refi could make sense. But if you’ve paid off most of your loan and only have a small amount of debt to pay off, it might not be worth refinancing. True, you could save a small amount. But on the other hand, applying for any type of loan or refi can affect your credit score—which could prove damaging if you’re also in the market for a mortgage or other loan.

The Pros and Cons of Student Loan Refinancing

Student Loan Refinancing Requirements

Eligibility can vary slightly between lenders, but the following are standard requirements for most refinance loans: 

• U.S. citizen or permanent resident
• Aged 18 years or older.
• Reside in a state where your chosen lender is authorized to lend.
• Have employment, sufficient income from other sources, or have an offer of employment starting within the next 3 months.
• Have graduated with an undergraduate degree or higher from a Title IV school that’s eligible to process federal student loans.

Lenders also look at the following:

• Credit. This involves a hard credit inquiry which temporarily affects your credit score. Your credit history is the most important factor in determining your interest rate.
• Income. Your lender will ask to see your pay slips or proof of other sources of income, in order to assess whether you have sufficient monthly cash flow to meet your monthly payments.
• Savings. In addition to income, your level of savings will also help the lender assess your ability to make monthly payments.
• Debt amount. The amount of remaining debt will help the lender determine the rate and term duration of your loan.

How to Refinance a Student Loan

A student loan refinance application is similar to other loan or refinance applications. It involves the following steps:

• Checking your credit. The major credit agencies (Equifax, Experian, and TransUnion) are legally obligated to share your credit history with you once every 12 months upon request, free of charge. As a general rule, credit of 700 or more is considered good, and 620-700 is average.
• Comparing lenders. You can use loan marketplaces to see loan options from multiple lenders or get a quote from a direct lender.
• Applying for your refinance. You’ll be asked to provide documentation, including: driver’s license or state ID, Social Security number, pay slips, and employment information.

Refinancing Student Loans with a Co-signer

Disclaimers 

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/27/2021. Variable interest rates may increase after consummation.

*Earnest Disclaimer

Earnest allows you to refinance incomplete bachelor's or associate's degrees if:

• Your last attending date was over 6 years ago
• Your credit score is 700+ 
• The school you attended was not a for-profit school

Commonbond: Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Oct 1, 2020 and may increase after consummation.

**SoFi Student Loan Refinance Disclaimer

Fixed rates range from 2.49% APR to 7.59% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.24% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

† Credible Terms and Conditions:

Credible is so confident in the personal loan rates you’ll find on Credible, we’ll give you $200 if you find and close with a better rate elsewhere. See full terms and conditions.

Nelnet Terms and Conditions:

Lowest rates listed include enrollment in auto debit, and are available only to the most creditworthy applicants. Advertised variable rates reflect the starting range of rates and fluctuate (increase or decrease) over the life of the loan. Fixed interest rates range from 2.30% APR (with auto debit discount) to 5.96% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan. Variable interest rates range from 1.87% APR (with auto debit discount) to 5.33% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. Variable rates may increase after consummation. The variable interest rate is equal to the One-Month London Interbank Offered Rate (“One-Month LIBOR”) plus a margin. The One-Month LIBOR in effect for each monthly period (from the first day of the month through and including the last day of the same month) will be the highest One-Month LIBOR published in The Wall Street Journal “Money Rates” table on the twenty-fifth (25th) day (or if such day is not a business day, the next business day thereafter) of the month immediately preceding such calendar month. The Annual Percentage Rate (APR) for a variable interest rate loan will change monthly on the first day of each month if the One-Month LIBOR index changes. This may result in higher monthly payments. The current One-Month LIBOR index is 0.09% as of December 1, 2021. The lowest rate for each loan type requires automatically withdrawn (“auto debit”) payment. The lowest rate is available only to the most creditworthy applicants. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, (3) the loan type selected, and (4) the highest level of education attained. If approved, applicants will be notified of the rate qualified for within the stated range.