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Student Loan Refinancing

Feb. 12, 2018
Personal Finance, Student Loans
NerdWallet adheres to strict standards of editorial integrity to help you make decisions with confidence. Some of the products we feature are from partners. Here’s how we make money.
We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

Student loan refinancing saves you money by replacing your existing college debt with a new, lower-rate loan through a private lender. To qualify, you need credit scores at least in the high 600s — ideally higher — and a steady income. If you fall short on either, you might need a co-signer who qualifies.

If you have private loans only, refinancing is the best way to reduce your payments.

Federal student loan borrowers may refinance as well, but those with poor credit or who struggle to make payments should investigate government income-driven repayment plans.

Frequently Asked Questions

Refinancing is a good idea if you have private student loans, or if you have federal student loans and don’t plan to take advantage of a federal forgiveness program or an income-driven repayment plan. Refinancing at a lower interest rate can reduce your payment or allow you to repay what you owe faster. For the biggest savings, choose the shortest repayment term.

Student loan refinance calculator: Should I refinance?

Yes. You need strong credit and a steady income to qualify for refinancing. Most lenders look for a credit score in at least the high 600s, a low debt-to-income ratio and a steady paycheck. Almost all lenders accept co-signers to help you qualify. Some lenders also favorably consider a job with high earning potential in a profession like medicine or law.

What if I don’t qualify to refinance my student loans?

Refinancing and consolidation describe the same thing: turning multiple loans into a single, new loan. If you go through a private lender, like the ones above, you may see 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.

Federal student loan consolidation vs. private student loan refinancing

Most borrowers will want to go with the lowest interest rate they qualify for. But if rates are similar, look for lenders that offer options such as deferment, forbearance or flexible repayment in case of an unexpected financial hardship.

Choose the best student loan refinancing offer

Refinancing student loans doesn’t cost money. Reputable private lenders do not charge origination fees or prepayment penalties. Consolidating federal loans through the Department of Education is also free. Some so-called debt relief companies charge fees to consolidate loans on your behalf, but it’s never necessary to pay for this service.

Student loan relief companies cash in on confusion

 

Refinance lender details and reviews

MyAutoLoan

Some of the lowest rates around

Type of lender: Online only
Loan servicer: Mohela
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: Education Loan Finance

 

CommonBond

Refinance a parent PLUS loan in your name

Type of lender: Online only
Loan servicer: Firstmark Services
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: CommonBond Student Loans

 

Earnest

Interest rate based on your preferred monthly payment

Type of lender: Online only
Loan servicer: Earnest
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: Earnest Student Loans

 

SoFi

Access to career coaching services

Type of lender: Online only
Loan servicer: Mohela
Deferment or forbearance available? Yes
Co-signer release available? No
NerdWallet Review: SoFi Student Loans

 

Citizens One

Refinance even if you didn't graduate

Type of lender: Traditional bank
Loan servicer: Firstmark Services
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: Citizens One Student Loans

 

Laurel Road

No limit on the loan balance you can refinance

Type of lender: Traditional bank
Loan servicer: Mohela
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: Laurel Road Student Loans

 

Purefy

Married couples can refinance their loans together

Type of lender: Online only
Loan servicer: PenFed Credit Union
Deferment or forbearance available? Yes
Co-signer release available? Yes
NerdWallet Review: Purefy Student Loans

 

Discover Student Loans

Generous flexibility for struggling borrowers

Type of lender: Online bank
Loan servicer: Discover
Deferment or forbearance available? Yes
Co-signer release available? No
NerdWallet Review: Discover Student Loans