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.  

New call-to-action

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

  • Fixed rates: 2.59% - 8.49% APR
  • Variable rates: 2.49% - 11.72% APR
  • Minimum credit: 650
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with some of the lowest fixed in the industry 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

ElFi offers top-rated customer service, some of the lowest rates available, and flexible terms to fit your goals.

  • Fixed rates: 4.29% - 7.29% APR
  • Variable rates: 2.48% - 7.98% APR
  • Minimum credit: 680
View More Details
Visit ElFi View Loan Disclosure
Student Loan Refinancing Made Simple.
Discover our low rates and fast, no-fee application process for refinancing your student loans or financing your college education.
The ELFI Difference:
  • Some of the Lowest Rates Available – We believe in rewarding financially responsible borrowers by providing some of the lowest refinancing rates available.
  • Expertise That’s Second to None – Our ELFI management team has over 30 years of expertise in student loans and student loan refinancing.
  • Fast and Easy Process – Secure your personalized student loan or refinancing options in just a few short minutes.
  • Personal Loan Advisors – Our award-winning customer service team will guide you every step of the way.
  • Service Coast to Coast - ELFI private student loans and student loan refinancing are available across the entire U.S. and Puerto Rico.

Click here to refinance now with ELFI.

#3 View More Details

SoFi is the leading student loan refinancing provider. 

  • Fixed rates: 3.99% - 8.24% APR
  • Variable rates: 2.49% - 7.99% APR
  • Minimum credit: 650
View More Details
Visit SoFi View Loan Disclosure

$30 billion+ in refinanced student loans. 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.

  • Serious savings: Save thousands of dollars thanks to flexible terms and low fixed or variable rates.
  • No hidden fees, no catch: No application or origination fees. No pre-payment penalties.
  • Fast, easy, and all online: Simple online application and access to live customer support 7 days a week.
  • Access to member benefits: SoFi members get career coaching, financial advice, and more—all at no cost.
  • 98% of surveyed members would recommend SoFi to a friend

Save thousands on your student loans and pay off your loans sooner. Find your rate.

#4 View More Details

Works with 300+ community lenders for higher approval chances

  • Fixed rates: 2.49% - 7.75% APR
  • Variable rates: 1.90% - 5.25% APR
  • Minimum credit: 660
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.

#5 View More Details

Best for borrowers who want to customize their repayment schedule to pay off debt fast.

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.

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

Save Money Now