Overwhelmed by all your options when it comes to refinancing your student loans? You’re not alone.
Refinancing your student loan debt can save you a lot of cash — an average of $253 a month or $16,183 over the life of your loan.
The key to nabbing those savings is finding the right refi deal for your unique situation. But don't stress! We're here to help.
|Interest Rates (APR)||ReFi Loan Types||Variable Rates (APR)
|Fixed Rates (APR)
|Hybrid Rates (APR)
|2.49% - 8.65%||Variable & Fixed||2.49% - 8.65%||3.29% - 8.24%||N/A||5, 7, 8, 10, 12, 15, 20|
|2.49% - 8.24%||Variable & Fixed||2.49% - 7.99%||3.49% - 8.24%||N/A||5, 7, 10, 15, 20|
|1.90% - 7.75%||Variable & Fixed||1.90% -5.25%||2.49% - 7.75%||N/A||5, 7, 10, 15, 20|
|2.49% - 8.49%||Variable & Fixed||2.49% - 7.99%||3.74% - 8.49%||N/A||5 to 20|
Are you one of the 8 million Americans who could be getting a better deal? A Goldman Sachs report estimates that $211 billion in student loans are ripe for refinancing – that's about 70% of private student loans and 25% of federal.
Wondering if you're a good candidate for refinancing or consolidating your student loans? Here's what these companies look at when considering your application:
Your creditworthiness is crucial. You'll be a good candidate if your credit score is in the 650 to 850 range.
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 of your monthly debt payments and then dividing that sum by your gross monthly income (what you earn before taxes).
A responsible finance history assures a bank that you are a low risk. Being current on your bills, credit cards and student loans is an important loan criterion. It helps create confidence that you will be able to pay your loan back within your designated repayment period.
Banks review your employment and income history.
Grads represent lower risk and have higher approval rates.
|Credit Score Minimum||Average Refi
|Minimum Debt Amount For Refinancing||Maximum Debt Amount For Refinancing||Minimum Income Requirements|
|650||Good||$5,000||No Max||No Min Required|
|650||779||$5,000||No Max||Income must exceed expenses|
|660||Good||$5,000||$125K: Undergrad $250K: Graduate $300K: Medical/Dental/Vet||$2,000/
|650||Good||$5,000||$500,000||No Set Requirement|
A new loan with a lower interest rate can decrease your monthly payment and/or allow you to pay off the loan faster. If you're looking for more money in your budget today, you can refinance your student loans for a longer period of time — spreading out your payments can help you reduce your monthly bill.
If your private or federal student loans have an interest rates of 4% or higher, refinancing will likely save you money through interest rate reduction. Parents and people with grad-school loans can also save money by refinancing PLUS loans, which have higher interest rates than other federal student loans.
Federal income-driven repayment plans can be an effective way to lower your monthly payments. However, they can also make it harder to achieve progress because most of your monthly payment is applied to interest rather than principle. Lowering your interest rate can help you make a bigger dent in your balance faster. (It's important to note that refinancing means you will no longer be eligible any federal student loan benefits.)
Qualifying for student loan forgiveness is for federal employees, teachers, or those who work in a public service. If you work in one of these fields and you have been consistent in your payments, you could be eligible to have your federal student loans forgiven. Once you refinance, these benefits will no longer be available to you. If you are eligible for student loan forgiveness, we recommend calculating whether student loan forgiveness or refinancing will save you more money over the life of your loans.
Many students apply for student loans with a cosigner, such as a parent or grandparent, when they first take out college loans. But once you’ve been out of school for a few years, you may want to release your loved one from that responsibility. Removing a cosigner from the original loan can be a difficult bureaucratic struggle. Refinancing can be a much simpler way to get everything in your own name.
|Average Savings (Monthly)||Average Savings (Yearly/Lifetime)||Auto Pay||Loyalty / Account Discount||Fees & Penalties|
|N/A||$29,340||0.25% on some loans||No||None|
|N/A||N/A||Yes - 0.25%||No||None|
|$191||$16,657||Yes - 0.25%||No||None|
|N/A||N/A||Yes - 0.25%||No||None|
Splash Financial is a leader in student loan refinancing with rates that can save you tens of thousands of dollars over the life of your loans. There are no application or origination fees, and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash is also one of the few companies that offers a refi product just for medical residents and fellows. You can check your rate with Splash in just minutes.
Click here to see more of Splash's offerings and to see how you can save money.
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, there's no maximum on the amount you can finance. Some state restrictions may apply.
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. Best of all, their customer service team will be ready to answer your questions from the application process through your final payment.
Earnest empowers you with the financial capital you need to live your best life. 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 considers every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.
Over the past decade, we’ve seen dramatic changes in technology, medicine, politics – and now college loans. The emergence of innovative startup firms that specialize in refinancing student loans have created a competitive environment with attractive new options for borrowers. If you’re struggling under the weight of college debt, now is a great time to find out if you could save money by bundling or renegotiating your loans. It’s easy to find out, and there are no prepayment penalties, origination fees, or application fees.
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.
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.
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%.
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.
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.
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.
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.
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.
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.
When you are ready to apply to refinance your student loans, get the following documents in order:
Managing one student loan payment instead of managing multiple is often an enticing option for people - and that’s essentially what you’re getting when you consolidate.
You’re taking your total loan amount and consolidating it into a single loan. You can create a direct consolidation plan pretty easily with all of your federal loans.
For private student loans, this is usually a consideration when refinancing with a private lender - and many lenders will offer consolidation as an option when you apply to refinance your student loans.
Consolidating your loans results in savings because it can lower the aggregate interest rate of your student loans when combining them all into one.