How to Refinance Your FedLoan Student Loan


Jen Williamson Updated: April 30, 2019

Did you know that you can refinance your federal loans, score a lower interest rate, and pay off your debt faster than you could under the Standard Repayment Plan? Really.

If you're wondering how to pull that off, the good news is that it's not hard. All you need to do is refinance with a private lender. Here's what you need to know.

FedLoan_Servicing_logo

The U.S. Department of Education distributes its loans through a number of loan servicers, and FedLoan Servicing is the largest one. If they’re your loan servicer, that means they collect and manage your payments. But you don’t have to stick with them. 

How does refinancing work?

When you refinance your student loans, you replace multiple different loans with a single loan through a new (private) lender. You get a new interest rate—hopefully a lower one. You also set new payback terms.

People refinance different 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, or saves tens of thousands over the length of their loan on average.

What’s in it for you?

Honestly? A lower interest rate. That's a pretty big deal (see the numbers in paragraph above). 

There are other benefits for refinancing too. You can adjust the terms on your loan—either take longer to pay it off, which reduces your monthly payment, or shorten 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 many different lenders or servicers. It’s much easier to manage a single loan.

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.

There is one drawback to this ... if you're someone who is planning on using some of the benefits that come with federal loans. You'll lose access to federal perks like income-driven repayment and the Public Service Loan Forgiveness program.

The benefit, though, is the chance to score a lower interest rate.

Here's the deal: The federal government charges the same interest rate to everyone, depending on the type of loan and when you took it out. That means your rate isn’t based on your credit score.

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

How much lower? 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. This could save you tens of thousands over the life of your loan.

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.

Curious about consolidation? Calculate your new rate using this handy online calculator.

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

How do you pick a lender to refinance with?

Great question. Here are a few things to take into account.

How much you can save on interest

You don’t have to go through the whole application process to get a ballpark idea. You can use our calculator here to find out how much you can save. (It only takes 10 seconds to find out. Seriously.)  

What makes this lender special 

If you’re getting similar offers 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. They are:

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

What people say about them

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 see if customer comments are predominantly positive or negative. It's a good way to get 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 reset the terms of your loan. Click here to find out if you’re Refi Ready. 

Refinance & Save Today With These Leading Lenders

#1 - Comet Recommended View More Details

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

  • APR: 2.41% - 7.82%
  • 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.

#2 View More Details

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

  • APR: 2.80% - 6.69%
  • 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 Fast Track Bonus**: Education Loan Finance's application process is streamlined and simple, and you can earn a $200 bonus just for closing your loan within 30 days of your initial application.
  • Education Loan Finance Referral Program**: Earn $400 for each new Education Loan Finance Client referred by you!
#3 View More Details

Works with 275+ not-for-profit community lenders for higher approval chances

  • APR: 2.38% - 7.50%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
Visit LendKey View Loan Disclosure

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 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 275 not-for-profit and 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.

#4 View More Details

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

  • APR: 2.43% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
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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.

#5 View More Details

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

  • APR: 2.48% - 6.25%
  • 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

Offers unemployment protection and career/coaching/networking

  • APR: 2.430% - 8.074%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
View More Details
Visit SoFi View Loan Disclosure

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, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
  • Strong customer service - It has more than 350 customer service reps available to help applicants through process.
  • Career coaching and networking - Perks include career services representatives who can help you find a job or negotiate a higher salary. SoFi also hosts networking events, happy hours and educational lectures on topics like buying a home in major cities around the country.
  • Unemployment protection - Borrowers who lose their jobs through no fault of their own may apply for Unemployment Protection. If approved, SoFi will suspend their monthly SoFi loan payments and provide job placement assistance during the forbearance period. These benefits are offered in three month increments, and are capped at 12 months, in aggregate, over the life of the loan. Note that interest will still accrue while loans are in forbearance.

Find out what interest rate SoFi can offer you here.

#7 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 3.02% - 7.76%
  • Minimum credit score: 670 w/cosigner
  • Refinance up to $350K
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.

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

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