Student Loan Refinancing Right for You? 7-Question Quiz

Katie Taylor Updated on April 30, 2019

If you’re struggling to make your monthly student loan payments, you may be considering ways to lower them. By refinancing for a lower interest rate or a longer payment term, you could reduce your payments to a more manageable number.

Of course, you might benefit from refinancing your student loans even if you don’t have trouble making your payments.

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But student loan refinancing isn't the right choice for everyone. Ask yourself these seven questions to see if it’s your best move.

1. Will your loan balance qualify?

Some lenders have a minimum balance requirement on private loans—often $5,000 or more.

If your balance is considered too low to refinance, but you’d still like a savings strategy, consider paying a little more than the minimum due each month—especially on high-interest loans—and asking your loan servicer to put the extra toward the principal.

You’ll lower your balance more quickly without drastically increasing your monthly payments.

2. How good is your credit score?

Your credit score determines what interest rates and terms you can receive. A history of on-time student loan payments improves your score. Lenders generally look for a score between 690 and 850.

If your score is too low, you might need a cosigner to insure your student loans in the case of default. If you’ve built a good credit score since taking out loans, you may be able to release a past cosigner from their obligation if you refinance.

One word of caution: when you apply to refinance, the lender will check your credit report. If you apply to several lenders to shop for rates, these inquiries will show on your credit report and could briefly lower your score. Try to limit your loan shopping to less than 15 days to reduce the impact.

3. Would you ever take advantage of federal loan repayment programs?

If you refinance a federal student loan with a private lender, you could lose eligibility for:

Also, if you have federal student loans and you teach, work in the public sector, or are currently eligible for income-driven repayment, you may qualify for student loan forgiveness—something you’d lose if you refinance. Find out before you make your decision.

In some cases, you may be more interested in reducing your interest rate than maintaining the federal repayment options. And if you do refinance your federal student loans, the new lender may offer flexible repayment plans that could impact your monthly payments and possibly reduce the amount you pay over the life of the loan.  

4. Do you have a steady source of income?

Having a steady full-time job shows lenders you’ll probably be able to make your payments on time, which can help qualify you for a lower interest rate when you refinance.

If your income stream is less certain, you may need a cosigner. 

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5. What interest rate are you able to get?

Interest rates on federal student loans can range from less than 4% to more than 7%, depending on the loan type. Private loan rates can be even higher, topping out at over 14%. 

If your current interest rates are high, you can probably save money by refinancing.

If the interest rate on your potential new loan is variable (which means it can fluctuate), make sure you find out how it’s calculated, how often it’s adjusted, and whether there’s a limit on how high it can go.

Fixed rates are less risky because they stay the same over time. Variable rates often start lower but could rise based on their specific index.

6. What are the new payment details?

Getting into the nitty gritty can be tedious, but it’s a necessary part of any big financial decision, especially refinancing your student loans. The specific terms of one plan might work better for you or result in lower payments over the life of the loan.

Ask your potential lender these questions:

  • When will my first payment be due?
  • How much will I owe each month?
  • How long will my repayment term be?
  • Can I pay off more than the minimum each month? How?
  • What will I pay in total?

You may also want to ask what happens if you lose your job or can’t make your payments.

7. Are there discounts or extra fees?

Some lenders offer discounts for behaviors they want to incentivize.

For instance, many provide a reduced interest rate if you opt for automatic debit, which helps ensure you make payments on time. If you’re relying on a discount, you may want to ask whether you could lose the discount under certain circumstances, like if you make a late payment.

Also, be sure to ask whether there are fees associated with refinancing. Some lenders charge a student loan origination fee or fees if you miss a payment, default on your loan, or even prepay.

See our picks for the best no-fee student loan refinance lenders.


Published in: Refinance

About the Author
Katie Taylor

Katie Taylor is a content writer and editor with expertise in law and policy, finance, and entrepreneurship. She writes for startups and small businesses about everything from bookkeeping to telecom. Her work has been featured in The Washington Post and She is continuing to pay off law school loans and lives in Richmond, Vermont with her wife, son, and an unruly dog. Read more by Katie Taylor

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#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • APR: 1.89% - 6.77%
  • Minimum credit score: 660
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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.

#2 View More Details

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

  • APR: 1.99% - 5.79%
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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
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  • 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.

#3 View More Details

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

  • APR: 1.99% - 6.20%
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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.

#4 View More Details

Credible is an online marketplace that provides borrowers with competitive, personalized loan offers from multiple, vetted lenders in real time.

  • Free to use, no hidden fees
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Credible is a multi-lender marketplace that empowers consumers to discover student loan refinancing options that are the best fit for their unique circumstances. Our integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 2,000 positive Trustpilot reviews and a TrustScore of 9.5/10. Credible is headquartered in San Francisco, California.

For more information, click here to apply now with Credible.

  • Compare prequalified rates from multiple, vetted lenders in 2 minutes.
  • Refinance federal, private and ParentPLUS loans.
  • San Francisco-based customer support 7 days a week.
  • Checking your rates won't affect your credit score.
  • Get your final offer in as little as 1 business day.
  • Credible’s partner lenders do not charge prepayment penalties, loan application fees, or origination fees.
  • Free to use, no hidden fees: Requesting rates can take just minutes and costs you nothing.
#5 View More Details

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

  • APR: 1.99% - 5.79%
  • Minimum credit score: 660
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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

Works with 300+ community lenders for higher approval chances

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Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. 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.

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Get a personalized quote from LendKey now.

#7 View More Details

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

  • APR: 2.39% - 5.99%
  • Minimum credit score: 680
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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 Referral Program**: Earn $400 for each new Education Loan Finance Client referred by you!

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

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