How To Know If You Qualify For Student Loan Refinancing

Jon O'Donnell Updated on May 14, 2019

Are you eager to conquer your student loan debt, but wondering if you qualify for refinancing? Here at Comet, we’ve helped people save more than $200 million on their student loans. Refinancing requirements can vary by lender, but we’ve put together a list of the most common things lenders look for.

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Typical requirements for student loan refinancing:

  • You are at least 18 and a legal U.S. resident. A loan is a legal contract. To refinance in your own name, you must be an adult. You’ll also need to provide a Social Security number (or Alien ID number for permanent residents).

  • You have at least $5,000 of student loan debt. Many companies require a student loan balance of at least $5,000 to refinance. However some, including Citizens Bank, require a minimum of $10,000.

  • A college degree. Grads represent lower risk and have higher approval rates. Most lenders require you to have at least a bachelor's degree from an accredited university. However, Citizens Bank will consider non-graduates, if you have made at least 12 consecutive, on-time payments.

  • A good credit score. You know that you’re hardworking, trustworthy, and responsible with your finances. But student loan refinancing is done by private companies that have to answer to investors. They need evidence that you’re a good credit risk. Most lenders require a FICO score of 650 or higher.

  • A low debt-to-income ratio. Banks want your credit score to be high, but they also want your debt-to-income ratio to be low — less than 36%. Calculate your ratio by adding all monthly debt payments and then dividing that sum by your gross monthly income (what you earn before taxes). For example, if you’re paying $1,000 a month toward debt and you earn $4,000 a month, your debt-to-income ratio would be 25%.

  • Solid employment. It will be difficult to refinance if you’re unemployed, underemployed, or have a low-paying job. Most lenders want to see recent pay stubs or tax returns that show you can comfortably make your payments. However, in some cases, lenders will consider your application if you have an offer of employment that will begin in 90 days or less.

  • History of on-time payments. A good track record of paying your bills on time, including credit cards and student loans, is an important loan criterion. You’re unlikely to be approved If you’re behind on your payments or have loans that are in default.

If you meet these requirements, find out how much you could save with these best banks for refinancing and consolidating student loans.

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What can I do if I don't qualify?

Refinancing can be a game-changer for people who are trying to lower their monthly student loan payments or get out of debt faster. If for some reason you don’t qualify right away, here are some things you can do:

Try other lenders. There are many great companies that offer student loan refinancing. Although they tend to have similar underwriting standards, some are a bit more lenient than others. If the first lender doesn’t approve your application, try a couple more. Shopping around is always a good idea, even if you do get approved right away.

Check your credit report for inaccuracies. A Federal Trade Commission study found that 25% of Americans had some kind of error on their credit reports, but most were able to dispute them with an immediate improvement in their scores. Everyone is entitled to one free credit report every 12 months. You can get yours by going to AnnualCreditReport.com. If you see any errors, dispute them.

Set up autopay for your current loans
. Make sure you never miss a payment by having the bills deducted automatically each month. This will help you establish a pattern of consecutive, on-time payments. Many lenders will also reward you with a discount on your interest rate when you enroll.

Increase your income. 
If you’ve been in your current job for a while, consider asking for a raise. There are also creative ways to earn extra money by turning hobbies into “side hustles,” or participating in the gig economy.

Pay down credit card balances. 
If you have high-interest rate credit card debt, consider transferring the balances to a new card with a low introductory APR. Then, work on paying down the balance(s) to less than 30% of your credit limit. Decreasing your revolving debt will raise your credit score and boost your chances of being approved for refinancing.

Sign up for a credit monitoring service.
 You can monitor your progress toward improving your score by signing up for monitoring through one of the three major credit bureaus (Experian, Equifax, TransUnion) or a company like Credit Karma. Some credit cards or banks will also show you your credit score for free on your monthly statement. Monitoring your credit can also alert you to possible identity theft.

Consider applying with a co-signer. 
If your credit isn’t as strong as you would like it to be, consider asking a parent, spouse, or family friend with strong credit to co-sign the student loan refinance application with you. A co-signer not only improves your chances of getting approved, but could also help you get a lower interest rate on that new loan. Some lenders have programs that let you release co-signers after 36 consecutive on-time payments.

Give it time. 
The first few years out of college can be a struggle. As you advance in your career, pay down some of your debt, and establish a longer credit history, your risk profile will improve. If you aren’t approved for refinancing right away, wait six months to a year and try again. 

A savvy step toward conquering debt

The best way to find out if you qualify for refinancing is to apply. We strongly recommend that you apply with at least three different companies, and then compare rates and options. Each inquiry generally takes less than 15 minutes. You can get an instant decision with no application fees, and there’s no need to worry about the effect on your credit score. The initial inquiry is considered a “soft pull,” and does not impact your score.

As part of the National Student Loan Union’s mission to help students and their families manage education costs, we regularly review lenders. The following are the companies we consider the nation’s best banks for student loan refinancing, based on their interest rates, transparency, product offerings, ease of applying, and customer service.

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

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

  • APR: 2.53% - 9.06%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
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.

#2 View More Details

Offers unemployment protection and career/coaching/networking

  • APR: 2.490% - 8.074%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
View More Details
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.

#3 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
View More Details
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.

#4 View More Details

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

  • APR: 2.49% - 7.89%
  • Minimum credit score: 650
  • Refinance up to $500K
View More Details
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.

#5 View More Details

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

  • APR: 2.50% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
View More Details
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.

#6 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 3.10% - 7.84%
  • Minimum credit score: 670 w/cosigner
  • Refinance up to $350K
View More Details
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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