Refinancing your student loans can be a smart strategy. Refinancing allows you to consolidate both your federal and private loans into a single, manageable loan — ideally with a lower interest rate.
When you refinance, you get a new interest rate, new terms, and a new lender. Unlike refinancing a mortgage, refinancing student loans is free. There are no fees or hidden costs.
A new loan with a lower interest rate will lower your monthly payments and potentially save you thousands of dollars over the life of your loan. Even if you can’t manage to get a lower interest rate, you can still lower your monthly payments by refinancing with a longer term.
Eligibility for “refinancing” often depends on your credit rating. For this reason, it’s always a good idea to check your credit score in advance. The better your credit, the lower the rate you’ll likely get.
Student Loan Refinance Options #
There’s certainly no shortage lenders out there who will refinance your student loan — and some are better than the others. As each lender’s rates and criteria vary, it’s important to shop around to find the best provider for you.
To help you make a better decision, here we pick and compare the top private student loan providers that offer refinance and consolidation loans with competitive rates and terms.
|LENDER||FIXED APR||VARIABLE APR||TERMS|
|Citizen One||5.39% – 11.87%||5.39% – 11.97%||5, 10, 15|
|LendKey||4.49% – 10.68%||4.38% – 7.98%||5, 7, 10, 15, 20|
|SoFi||4.49% – 8.99%||4.99% – 8.24%||5, 7, 10, 15, 20|
Student Loan Refinance FAQ #
Why should I refinance my student loans? #
Refinancing is a good idea if you qualify for a lower rate and you’re comfortable giving up the benefits that come with federal student loans. When you refinance federal loans, you lose access to income-driven repayment plans, loan forgiveness programs and other federal loan perks.
In the best case scenario, refinancing student loans can lower your interest rate, saving you thousands in total interest and enabling you to make monthly payments that pay off your loans faster.
How do I refinance my student loans? #
Student loan refinancing saves you money by replacing your existing college debt with a new loan through a private lender — ideally with a lower interest rate.
When you refinance student loans, a private lender pays off your existing loans and replaces them with one loan with a new interest rate and repayment schedule.
When should I refinance? #
The best time to refinance your student loans is typically after graduation, when you’ve landed a job and established strong credit. If you have a stable income with good credit, the sooner you refinance, the better. This is because of the potential interest savings.
What is the difference between student loan refinancing and student loan consolidation? #
Student loan consolidation allows you to combine multiple loans into one loan with a single monthly payment. Whereas, with student loan refinancing, you take out an entirely new loan at a potentially lower interest rate to pay off multiple student debts or lenders.
Should I refinance or consolidate my student loans? #
Refinancing your student loans through a private lender allows you to consolidate both federal and private student loans into a new, single loan with a potentially lower interest rate. Student loan refinancing is likely worth it if you qualify for a lower interest rate.
If you consolidate your federal loans through the government, you won’t receive a lower interest rate, but you may qualify for loan forgiveness programs or income-driven repayment plans.
How does refinancing a student loan affect my credit score? #
Refinancing a student loan can improve your credit in the long run by adjusting your monthly repayments to something you're more likely to afford.
However, it may hurt your credit in the short run because most lenders conduct a hard credit inquiry during the application process, which causes your score to dip but typically only by five points or fewer.
How do I decide between a fixed or variable-rate loan? #
The choice between a fixed rate or variable-rate loan often comes down to your tolerance for risk. While you may start off with a lower rate if you choose a variable interest rate, the rate may fluctuate, along with your monthly payment.
Refinancing into a fixed-rate loan often means starting at a higher interest rate, but that rate is locked in for the life of the loan. Unless you refinance, the interest rate never changes.
What will refinancing cost me? #
Nothing. Most lenders do not charge prepayment penalties, loan application fees, or origination fees.
What do you need to qualify for refinancing? #
You’ll likely need a credit score of 680 or higher in order to be eligible to refinance your student loan, unless you have a cosigner. If your credit is weak and you lack a cosigner, you may want to work on building your credit first before trying to refinance.