How to Refinance Your FedLoan Student Loan

Jen Williamson Updated: February 3, 2020

Here's a bit of good news: you can refinance your federal loans, score a lower interest rate, and pay off your debt faster than you can under the Standard Repayment Plan you may be on now. 

Wondering how? 

Fortunately, it's not hard. All you need to do is refinance with a private lender. And we've put together everything you should know to make that happen.  

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The U.S. Department of Education contracts with several loan servicers to manage its loans, and FedLoan Servicing is the largest. If they’re your servicer, they collect and manage your payments. But you're not stuck with them. 

How does refinancing work?

Here's the deal: The federal government charges the same interest rate to everyone who takes out a certain type of loan at a specific time, regardless of their income or credit score. 

If you have a good score, you could qualify for much lower rates with a private lender.

When you refinance your student loans, you replace your existing loans with a single loan through a new private lender. You get a new interest rate—hopefully a lower one—and new payback terms.

People refinance other types of loans—like mortgages—all the time to land a lower interest rate. And it works the same with student loans. The average borrower who refinances lowers their payment by about $253 per month and saves tens of thousands over the life of their loan.

What’s in it for you?

Well, a lower interest rate is a pretty big win, and refinancing is the only way you can reduce the interest rate on a federal student loan.

The federal equivalent of refinancing—consolidation—generally won’t get you a lower interest rate. Instead, the government determines your interest by taking the weighted average of all your loan interest rates, rounded up to the nearest eighth of a percent.

The rate for federal Direct Subsidized and Unsubsidized Loans taken out after July 1, 2018 is 5.05%. Many private lenders offer low-end interest rates at less than half that. Since just a few percentage points can translate to hundreds of dollars in your pocket every month, that's a major benefit.

There are other advantages to refinancing too. You can adjust the terms on your loan to:

  • take longer to pay it off, which reduces your monthly payment, or
  • reduce the term and pay less interest over the long haul. 

You can also replace multiple loans with a single loan, so you aren’t making payments to multiple lenders or servicers. It’s much easier to manage a single loan, and you're less likely to miss payments.

See also: The One Thing You're Not Doing That Could Save You Big-Time On Your Student Loans

What happens when you refinance federal loans?

The federal loan disappears, and you replace it with a private loan (and a better interest rate).

There is one drawback to refinancing. If you're planning to use some of the benefits that come with federal loans, you may not be a good candidate for refinancing. You'll lose access to federal perks like income-driven repayment and the Public Service Loan Forgiveness program.

The benefit, though, is big: the chance to score a lower interest rate, especially for borrowers who aren't eligible for federal loan benefits. 

See also: Quiz: Are You Paying Too Much For Your Student Loans?

Imagine Life Without a Student Loan Payment... Start Saving Now!

How do you pick a lender to refinance with?

These days you have lots of options for a lender. Here are a few things to take into account.

How much you can save on interest

Most lenders let you get an estimated quote right on their homepage. You'll have to give some basic information, but just getting a quote doesn't require a hard credit pull and won't affect your credit score.

Pop the rate in our calculator here to find out how much you can save. 

What makes this lender special 

If you’re getting similar rate quotes from different lenders, consider what else makes them stand out. 

For example, several of our highly vetted partner lenders have benefits that go beyond their low interest rate. 

  • SoFi offers extensive networking, career coaching and entrepreneurial support for ambitious borrowers.
  • CommonBond makes social responsibility a central part of what they do by helping fund schools in high need areas.
  • LendKey will connect you with over 13,000 local community banks and credit unions that you might not be able to find on your own.
  • ELFI gives away over $18 million in scholarships while helping you refinance your loan.

See also: How to Find the Right Student Loan Refinance Company

What people say about them

Do some digging before you link up with a particular lender. Check out online reviews or do a search for the company in Twitter hashtags. See what people praise—and what they complain about.

No lender has a perfect set of online reviews, but customer comments can give you a sense of what it’s like to work with this lender.

Refinancing your FedLoan Servicing student loan is a great way to save on interest—and to reset the terms of your loan. Click here to find out if you’re Refi Ready. 

Refinance & Save Today With These Leading Lenders

#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • APR: 1.89% - 6.77%
  • Minimum credit score: 660
  • No Maximum when refinancing
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.

#2 View More Details

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

  • APR: 1.99% - 5.79%
  • 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.

#3 View More Details

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

  • APR: 1.99% - 6.20%
  • 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.

#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
  • Minimum credit score: 650
  • No refinancing maximum amount
View More Details
Visit Credible View Loan Disclosure

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
  • 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.

#6 View More Details

Works with 300+ community lenders for higher approval chances

  • APR: 1.99% - 8.77%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
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.

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 300+ 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.

#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
  • No refinancing maximum amount
View More Details
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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