Refinance Student Loans

Should I refinance my student loans now?

This answer comes down to whether you are eligible for a lower interest rate than you are paying right now.

You’re able to apply for refinancing as soon as you graduate - however most people wait until the deferment period is over and they have a monthly payment every month.

The primary consideration when refinancing, for many, is lowering their monthly payments. If you have high-interest loans, it is often possible to achieve this.

Does refinancing cost money?

No. With our partners, there is no cost to refinance your student loans. We only give our stamp of approval to lenders that do not charge fees application or origination fees.

How will I know if refinancing will save me money?

Even a 0.50% reduction in your interest rate can translate into large savings over the life of your student loans. When refinancing, your new interest rate will be based on your credit history: the better your history, the lower your rate. Our partner banks listed above offer rates starting as low as 2%.

How long does the refinance process take? 

How long does it take to start saving, once my application is approved?  

It will take about 15 minutes on average to go through the application process with our partners. 

It depends on the bank, but generally once approved, you can expect to start seeing your savings within three to four weeks after you receive your final disclosure. It’s important to continue making payments to your original lender until you’ve confirmed that the payoff has posted.

Please note: Timing may vary slightly depending on the lender.

Can I refinance both private and federal student loans?

Yes. You can refinance both, but be cautious with your federal loans. Once you refinance your federal loans, you will lose benefits related to Student Loan Forgiveness and Income-Driven Repayment.

Should I choose a variable or fixed rate?

What is a variable interest rate?

A variable interest rate is one that can change based on the terms of the loan. For instance, a variable rate may be 3% early in the year but 4% later in the same year. A change in the general economy can cause such a fluctuation. For instance, when mortgage rates increase, the student loan variable rate may also increase. Any loan not locked into a rate can go up or down over time. Federal student loans aren’t issued with variable rates, but private student loans may or may not be.

What is a fixed interest rate?

Fixed rate student loans keep a constant interest rate. A loan issued with a fixed rate of 3.5% will maintain that annual percentage rate for the life of the loan.

What are the pros and cons of each?

The primary benefit of a fixed rate loan is that your payment amount won't change. For most people, a fixed interest rate is preferred. It's easier to budget, and there are no surprises. A variable rate loan is beneficial if the rate is lower and you’re planning on paying off the loan in a year or less. In that case, you don’t have to worry too much about interest rate increases, which will add to your monthly payment.

What is the current interest rate environment?

Current interest rates (as of September 30, 2022) are quite low, making this an excellent time to refinance. It is uncertain how long low rates will be sustained.

I want to refinance but don’t meet the eligibility requirements. What do I do?

1. Check your credit report.

AnnualCreditReport.com is the only source authorized by federal law to provide free annual credit reports. On this site, you can get your credit report for free each year from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. Once you get your report, spend the time to make sure it is correct. If you find anything inaccurate, contact the specific credit reporting bureau to dispute and remove the incorrect items. A bank will typically require you to have a credit score that is over 650 to refinance student loans.

2. Pay down credit card debt.

You can improve your credit score and your chances of being approved for refinancing your student loans if you pay down the debt on your credit cards. If you have high balances with high interest rates, consider transferring them to cards with lower rates. Then, work on paying down all of your balances to below 30% of your credit limit. When you pay down the debt on your credit card, you boost your credit score.

3. Look for a cosigner.

If your credit isn’t as strong as you would like it to be, find a parent, spouse, or family friend with strong credit to cosign the student loan refinance application with you. A cosigner not only improves your chances of getting approved, but could also help you get a lower interest rate on that new loan.

Does refinancing hurt my credit score? Does shopping around hurt my credit score?

Shopping around should not impact your credit score, because most lenders will provide quotes without having to pull your credit report. This is called a "soft pull."

When you're ready to go with a specific lender, that company will need to do a hard pull, which can result in a small decrease in your score. However, in the long run you should see an increase due to the benefits of refinancing.

What documents will I need to provide?

When you are ready to apply to refinance your student loans, get the following documents in order:

• The most-recent loan statement for each loan that you want to refinance, showing your loan servicer's name and address, along with the repayment start date, estimated payoff date, original loan balance, current loan balance, interest type, and interest rate.
• Driver’s license, passport, or bank statement to verify your address.
• Your last month’s pay stubs.
• Your most recent tax return.
• Proof of graduation.