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Last update: September 30, 2023
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Student loan refinancing is the process of taking out a new loan to pay off your existing student loans. The new loan may have a lower interest rate or better repayment terms, which can save you money on your monthly payments and overall loan costs.
Learn more about student loan refinancingStudent loan refinancing eligibility depends on financial stability and creditworthiness. Lenders typically look for a good credit score, steady income, timely repayment history, and a low debt-to-income ratio. Degree completion may also be required.
A great time to refinance your student loan can be when interest rates have dropped, or your financial situation or credit score has significantly improved, allowing for potentially lower rates. It can also be beneficial if you wish to release a cosigner from the loan.
There's no limit to how many times you can refinance your student loans. It makes sense to refinance again whenever interest rates go down or your financial situation improves. Refinancing is also usually free from fees like prepayment penalties and origination fees.
This month, we have a variety of student loan refinancing options. We've partnered with top lenders to help you refinance at a lower rate and better terms
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Consolidation and refinancing are the two primary ways to restructure your student loans. Each option has unique characteristics, and they apply to different types of existing loans.
Refinancing replaces an existing loan with a new one, often with better terms or a lower interest rate. This is common when a borrower's credit score improves, or interest rates drop.
Have high-interest loans
Recently improved their credit score
Want to change their loan term
Consolidation simplifies your loans by combining multiple loans so that there's just one monthly payment to manage. However, loan consolidation usually won't lower your interest rate.
Want to manage fewer loan payments
Want to keep federal loan benefits
Want to change their loan term
Refinancing makes the most sense whenever interest rates go down or your financial situation improves. That way you have better chances of lowering your interest rate and saving money over the lifetime of your loan.
Here are a few things to consider before refinancing your student loans to help you make informed decisions, manage your finances effectively, and avoid unnecessary debt.
Consider your ideal monthly payment
Shop around for the best rates and compare multiple lenders
Make sure you have a strong credit score or cosigner before applying
Double-check that your lender has your current contact information
Settle on the first lender you see
Give personal or financial information to unfamiliar callers
Choose a loan with a higher interest rate than you had before
Refinance federal loans without considering the loss of federal benefits
Here's how our process works in just three easy steps:
Give us the details in our 2-minute form so we can show you accurate rates from multiple top lenders.
Next, we'll display an organized table with rates and terms from several top lenders. Our table makes it incredibly easy to compare and decide on the best loan for your specific needs.
Once you've found a loan you like, we'll help connect you with your chosen lender to complete the application process.
Illustrative purposes, actual results may vary. Prequalified rates are not a firm offer of credit.
Let's match you with your perfect refinancing option.
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In order to find the best student loan refinancing options with the lowest interest rate and most favorable loan terms, you'll need to consider a variety of important factors while you're shopping. Here are just a few of the most important to look out for.
You should compare the interest rates of different lenders to find the best deal, ideally lower than what you're currently paying.
Some lenders may offer benefits such as temporarily delaying or reducing payments in case you experience financial hardships or fall behind on your repayment. You can learn more about these options in our comparison table below.
The term of the loan will affect the monthly payment amount. A longer-term loan will result in a lower monthly payment, but you will end up paying more in interest over the life of the loan.
If you have a cosigner on your existing student loan who no longer wishes to be attached to it, you should look for a lender with an option to remove your cosigner.
While the exact requirements vary by lender, you typically need to have:
A degree: You should be able to find a lender willing to refinance your student loans if you have a degree from an accredited university
A good credit score: A strong credit score will likely allow you to get a lower interest rate, which will save you money over the life of your loan
A steady income: You'll probably qualify for a lower monthly payment with a stable income, which will make it easier to afford your loan payments
Whether you should consolidate or refinance depends on the kind of loan that you have.
When to consolidate: If you have one or more federal loans, you may want to consolidate those loans so that you can make a single payment and still maintain your federal loan benefits. There is no option to consolidate private student loans.
When to refinance: If you have one or more private student loans, you'll want to refinance any time your financial situation improves or interest rates go down so that you save money. While you could refinance your federal loans to get a lower rate, it would mean losing your federal loan benefits, so there's a trade-off.
Student loan consolidation and refinancing are similar, but they're used in slightly different situations:
Consolidation is best for federal loans. It combines one or more federal loans into a new federal loan to let you make a single payment and qualify for government programs. Private student loans are not eligible for consolidation.
Refinancing is best for saving money. It gathers one or more existing federal or private loans into a new private student loan, ideally with a lower interest rate that will help you pay less over time.
A fixed rate is an interest rate that won't change over time. A variable rate is a rate that can go up or down during the life of your loan.
If interest rates are expected to rise, then a fixed rate loan may be the better choice. On the other hand, if interest rates are expected to fall, then a variable rate loan may be the better choice.
Some factors to consider deciding between a fixed rate and a variable rate student loan include:
The stability of your income: A fixed rate loan is predictable, which can be helpful if your income is unpredictable.
The length of your repayment period: A shorter repayment period will mean that you pay less interest overall, so a variable rate loan could save you money in the long run if you pay off your loan before the interest rate rises.
Your tolerance for risk: A variable rate loan means that your payments could go up or down, depending on changes in the market. If you are comfortable with this uncertainty, a variable rate loan could save you money.
While the exact requirements vary by lender, you typically need to have:
A degree: You should be able to find a lender willing to refinance your student loans if you have a degree from an accredited university
A good credit score: A strong credit score will likely allow you to get a lower interest rate, which will save you money over the life of your loan
A steady income: You'll probably qualify for a lower monthly payment with a stable income, which will make it easier to afford your loan payments
Student loan consolidation and refinancing are similar, but they're used in slightly different situations:
Consolidation is best for federal loans. It combines one or more federal loans into a new federal loan to let you make a single payment and qualify for government programs. Private student loans are not eligible for consolidation.
Refinancing is best for saving money. It gathers one or more existing federal or private loans into a new private student loan, ideally with a lower interest rate that will help you pay less over time.
Whether you should consolidate or refinance depends on the kind of loan that you have.
When to consolidate: If you have one or more federal loans, you may want to consolidate those loans so that you can make a single payment and still maintain your federal loan benefits. There is no option to consolidate private student loans.
When to refinance: If you have one or more private student loans, you'll want to refinance any time your financial situation improves or interest rates go down so that you save money. While you could refinance your federal loans to get a lower rate, it would mean losing your federal loan benefits, so there's a trade-off.
A fixed rate is an interest rate that won't change over time. A variable rate is a rate that can go up or down during the life of your loan.
If interest rates are expected to rise, then a fixed rate loan may be the better choice. On the other hand, if interest rates are expected to fall, then a variable rate loan may be the better choice.
Some factors to consider deciding between a fixed rate and a variable rate student loan include:
The stability of your income: A fixed rate loan is predictable, which can be helpful if your income is unpredictable.
The length of your repayment period: A shorter repayment period will mean that you pay less interest overall, so a variable rate loan could save you money in the long run if you pay off your loan before the interest rate rises.
Your tolerance for risk: A variable rate loan means that your payments could go up or down, depending on changes in the market. If you are comfortable with this uncertainty, a variable rate loan could save you money.
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