6 Options For Refinancing Private Student Loans

Jon O'Donnell Updated on May 19, 2019

There is good news for Americans feeling overwhelmed by high-interest student loans. A variety of factors have transformed the student lending industry in recent years, giving college grads more options than ever to take control of their student debt. Whether it’s lowering monthly payments, consolidating multiple loans, releasing a co-signer, or paying it off faster – borrowers are making their debt more manageable by refinancing under better terms.

Is refinancing right for you? It depends. There is no single “right” answer for all borrowers. The best way to make a sound financial decision is explore all of your options. That’s why we’ve done some of the legwork for you, examining refinancing options for six common situations:

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1. If you want to lower your interest rate...

Many student loans originated prior to 2013 have interest rates of 6.8% or more. Borrowers with good credit might be able to get significantly lower rates by refinancing. For example, SoFi offers fixed rates as low as 3.375% for 5-year loans, 4.49% for 10-year loans, and 5.25% for 20-year loans.

Even small interest rate discounts can add up over time. A borrower with $100,000 in debt could save more than $20,000 over a decade by refinancing from 7.9% to 4.49%.

Most lenders have both fixed and variable interest rates. Variable rates can change, but in the short run, they can be very attractive. Citizens One has variable rates as low as 2.38%. CommonBond also has a hybrid rate that is fixed for the first 5 years and variable for the next 5 years.

2. If you're struggling to make your monthly payments...

A lower interest rate would help decrease monthly payments, but there are other options as well. If you’re not earning much now, but you expect your income to rise, and interest-only period might help. People who refinance with College Ave can choose to make immediate full payments or make two years of interest-only payments first.

Lengthening the payback time frame is a surefire way to lower monthly payments, although it can increase the total cost depending on the interest rate. Most private lenders offer a variety of terms when people refinance. College Ave allows borrowers to design their own timetable, picking any number of years between 5 and 15.

Many lenders offer a discount – typically .25 percentage points – if you sign up for autopay. Citizens One has an additional .25 percent loyalty discount if the borrower or cosigner has other qualifying accounts with the bank, making it possible to save .5 percent overall.

Monthly savings by refinancing can vary, depending on the amount owed and the borrower’s financial history. But people who refinance with Citizens One save an average of $137 a month, people who refinance with SoFi save an average of $316 a month, and those who refinance with CommonBond save an average of $323 a month.

3. If you want to get out of debt faster... 

Making extra payments or refinancing to a shorter time frame are both options to get out of debt faster. None of the lenders we profiled had penalties for prepayment. And people with good credit might be able to save enough by refinancing to a lower interest rate that they can pay the same amount each month and get out of debt sooner. (For example, a graduate student with $60,000 of debt can pay it off in 11 years instead of 15 by lowering the interest rate from 6.8% to 3.2%)

Refinancing can lead to significant savings over time. SoFi reports that borrowers who refinance with them save an average of $17,208 over the life of the loan. It’s even higher with CommonBond, where the average refinancer saves $24,046 on their total repayment.

Finding extra money where you can is helpful. SoFi, CommonBond and College Ave all have referral bonuses that you can apply to your loan. 

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4. If you want to consolidate multiple loans into a single payment...

Refinancing is a good way to simplify your finances and consolidate multiple loans from different lenders into a single monthly payment. And now It’s faster than ever to find out what that payment would be.

Many refinance lenders require statements from each of your loan servicers, showing how much is left to repay on your loans. However, College Ave pulls that information from your credit report, saving a lot of time. Its application takes about 3 minutes. Citizens One and CommonBond also have applications that take between 2 and 5 minutes to complete. You can get an instant decision with no application fees, and there’s no need to worry about the effect on your credit score.

Both private and federal loans can be consolidated through refinancing, however, you should use caution before refinancing federal loans. If you refinance them with a private firm, you will lose eligibility for income-based repayment plans and loan forgiveness. It’s important to weigh the benefits of a lower rate against any tradeoffs before you give up potential federal benefits.

5. If you want to release a co-signer from responsibility...

For many college graduates, refinancing offers a chance to move student loans into their own names and release a co-signer from responsibility. If your own credit is strong enough, there is no need to have a relative or family friend vouch for you. If you still need help qualifying, though, there are new options for releasing cosigners even after you refinance. Citizens One has a program where after 3 years of consistent payments, you can release cosigner from your refinanced loan.

6. If you want to use home equity to pay off your student loans...

For homeowners who have built up some equity, SoFi has partnered with Fannie Mae to offer a new program to pay off student loans as part of refinancing a mortgage. SoFi unveiled its new offering in November 2016. You can consolidate student loans with your existing mortgage, then refinance the total amount at a lower rate (with a loan-to-value limit of 80%). The company estimated that 8.5 million households could potentially qualify, although it’s a good idea to discuss it with a financial advisor first.

Find out what's available to you...

You may not be able to change the fact that you have student loans, but there are new options to help you take charge of them. Among all of the companies that specialize in student lending, we consider the ones mentioned above to be the best, based on their interest rates, transparency, product offerings, track records, ease of applying, and customer service.

We recommend that you check into the lenders listed here - and start saving today.

Published in: Refinance

About the Author
Jon O'Donnell

Jon is a writer and marketer for Nitro who is passionate about bringing transparency to the student loan process along with providing families with the information needed to make smart financial decisions. He also just recently refinanced his student loans allowing him to pay them off 5 years faster all while saving an additional $152/month. As he continues to pay them off himself, he strives to help others do the same. Jon also has a long history of connecting people with educational opportunities to help them improve their careers and their overall personal finances. In his free time you can find him reading travel blogs and researching destinations around the world in search of his next adventure. Read more by Jon O'Donnell

Refinance and Save Today With These Lenders

#1 - Comet Recommended View More Details

Earnest empowers people with the financial captial they need to live better lives.

  • APR: 2.41% - 7.82%
  • Minimum credit score: 650
  • Refinance up to $500K
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Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#2 View More Details

Many ELFI customers save hundreds per month month and thousands over the length of the loan term.

  • APR: 2.80% - 6.69%
  • Minimum credit score: 680
  • No refinancing maximum amount
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Visit ElFi View Loan Disclosure

Education Loan Finance is designed to assist borrowers through consolidating outstanding education loans into one single loan that effectively lowers your costs of education and/or makes repayment very simple. Education Loan Finance - backed by the strength of SouthEast Bank - combines the benefits of traditional education loan refinancing with the superior products, service, and support found in the private market.

Education Loan Finance (ElFi) review

Check out their low rates today to see how much you can save.

  • Get Your Rate. With Education Loan Finance's Find My Rate tool, you can complete a short application to receive a preliminary quote on your eligible rates and terms, all without affecting your credit score.
  • Apply in Minutes. Education Loan Finance's online application is fast and simple.
  • Outstanding Personalized Service. Our Personalized Loan Advisors specialize in student loan refinancing and help busy professionals find the option that's right for them.
  • Student Lending Experience: Education Loan Finance isn't a start-up company - we have a longstanding history and expertise in serving student loan borrowers.

Attractive Bonus and Referral Programs:

  • Education Loan Finance Fast Track Bonus**: Education Loan Finance's application process is streamlined and simple, and you can earn a $200 bonus just for closing your loan within 30 days of your initial application.
  • Education Loan Finance Referral Program**: Earn $400 for each new Education Loan Finance Client referred by you!
#3 View More Details

Works with 275+ not-for-profit community lenders for higher approval chances

  • APR: 2.38% - 7.50%
  • Minimum credit score: 660
  • Refinance up to $300K
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Visit LendKey View Loan Disclosure

LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 275 not-for-profit and community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#4 View More Details

Operates in all 50 states; 2nd largest student loan refinancing lender

  • APR: 2.43% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
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Visit Laurel Road View Loan Disclosure

Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

Laurel Road Student Loan Refinance Review

  • National reach - Online lender that is available in all 50 US states, the District of Columbia and Puerto Rico.
  • No fees & the lowest rates in the space - Laurel Road is the most transparent about the rates they provide customers, and offer the lowest rates where it counts. Our customers will save more than $20,000 over the life of their loans on average. 
  • Customer service reputation - Laurel Road's customer service representatives are no rookies. With 19 years of experience on average, Laurel Road’s Customer Service team delivers an experience that is best in the industry. They work to build meaningful, life-long relationships with our valued customers to improve their overall financial wellness.
  • The stability & security of a bank - They are a division of Darien Rowayton Bank, a stable and secure FDIC-insured bank, regulated by the FDIC and the Connecticut Department of Banking.

Get your personalized, pre-approved rates in less than 5 minutes.

#5 View More Details

For every loan they fund, they contribute to the education of a child in need

  • APR: 2.48% - 6.25%
  • Minimum credit score: 660
  • Refinance up to $500K
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Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#6 View More Details

Offers unemployment protection and career/coaching/networking

  • APR: 2.430% - 8.074%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
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Visit SoFi View Loan Disclosure

SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
  • Strong customer service - It has more than 350 customer service reps available to help applicants through process.
  • Career coaching and networking - Perks include career services representatives who can help you find a job or negotiate a higher salary. SoFi also hosts networking events, happy hours and educational lectures on topics like buying a home in major cities around the country.
  • Unemployment protection - Borrowers who lose their jobs through no fault of their own may apply for Unemployment Protection. If approved, SoFi will suspend their monthly SoFi loan payments and provide job placement assistance during the forbearance period. These benefits are offered in three month increments, and are capped at 12 months, in aggregate, over the life of the loan. Note that interest will still accrue while loans are in forbearance.

Find out what interest rate SoFi can offer you here.

#7 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 3.02% - 7.76%
  • Minimum credit score: 670 w/cosigner
  • Refinance up to $350K
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Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

Comments

I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

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