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If you can qualify and have stable finances, consider refinancing student loans if it will save you money.
Student loan refinancing means swapping your current student loans for a new loan with a lower interest rate. That could save you big money over time.
Whether you should refinance student loans depends on your situation. You should refinance your student loans if:
Note: This calculator assumes that after you refinance, you’ll make minimum monthly payments.
You can potentially save tens of thousands of dollars throughout the life of your loan by refinancing. There are three main benefits to refinancing student loans:
Unlike refinancing a mortgage, refinancing student loans doesn’t cost money. There are generally no origination, application or prepayment fees. But read your loan agreement carefully to make sure you understand costs you could incur in the future, like late fees.
If you decide to refinance student loans, compare multiple lenders to see which offers you the best rate. If you have similar offers, give greater weight to lenders that offer the most flexibility with payments and the longest possible forbearance options. Consider which offers the best student loan refinance bonus as well.
Student loan refinance lenders’ requirements vary, but you’ll have a good shot a qualifying if you:
If you don’t meet the credit and income requirements for refinancing, you may still qualify if you apply with a co-signer who does. Contact the lender to find out why your application was rejected, then take steps to meet that requirement, if possible. That may mean building your credit score or paying off one of your student loans to lower your debt-to-income ratio.
If you have federal loans and are struggling to make consistent payments, refinancing is also not for you. Instead, consider federal student loan consolidation or an income-driven repayment plan, if you’re not on one already. These options won’t save you money in the long term, but they can lower your monthly student loan payment and free up cash for other expenses.
If you have private student loans, you have nothing to lose by refinancing because private loans aren’t eligible for federal loan programs. You also can't transfer private loans to the federal loan program.
To find out whether your current student loans are federal or private, log into the government’s online Federal Student Aid portal or the National Student Loan Data System. Any student loans that don’t appear in these two places are private. They will most likely be listed on your credit report.