of combined experience covering higher education and student loans
across student loan origination and student loan refinance, ensuring accurate star-rating
covering affordability, eligibility, consumer experience, flexibility and application process
650
4.15-9.99%
5.88-9.99%
650
4.24-9.99%
6.49-10.49%
680
4.89-9.04%
5.54-9.12%
Splash Financial Student Loan Refinance
650
4.20-10.24%
4.74-10.24%
| Lender | NerdWallet Rating | Min. credit score | Fixed APR | Variable APR | Learn more |
|---|
Frequently Asked Questions
- What is a student loan refinancing?
Student loan refinancing takes multiple loans and combines them into a new loan with a private lender such as a bank or online lender. The new servicer will pay off your old debt and typically offer a lower interest rate or longer term with smaller monthly payments — saving you money or making your payments more manageable. You can refinance federal and private student loan debt into one new private loan.
- What is student loan consolidation?
Student loan consolidation is similar to refinancing, but only federal loans can be consolidated, and the process happens through the Department of Education. Borrowers can combine multiple federal loans into a new Direct Consolidation Loan after graduating, leaving school or moving to less than half-time enrollment.
Consolidating may result in lower monthly payments and the ability to participate in loan forgiveness programs and income-driven repayment plans.
However, there are downsides to consolidation, like a longer repayment timeline, an increase in interest and the potential loss of certain benefits. It’s important to weigh the advantages and disadvantages of refinancing versus consolidation carefully before taking action to ensure you don’t lose useful federal benefits.
The Department of Education does not consolidate private student loans. You would need to contact your private student loan servicer to see what consolidation and refinancing options are available.
- What kind of student loans can be refinanced?
Federal student loans: You can refinance federal student loans into a private loan, but it means you'll forfeit federal benefits like income-driven repayment plans and eventual student loan forgiveness. If you want to keep your federal loans federal, consider consolidation with the Department of Education.
Private student loans: Private student loans can be refinanced, and interest rates are either fixed or variable. The ideal time to refinance your student loans is when you can get a lower rate and commit to the monthly repayments. Borrowers with limited credit history may not qualify for a lower rate through private student loan refinancing.
- How to refinance student loans
Identify your financial goals. Do you need lower monthly payments? Or do you want to pay less interest over a shorter term? Refinancing to a shorter term means higher monthly payments, but you’ll pay less total interest. The opposite is true: with lower monthly payments, you’ll pay more interest over a longer term.
Evaluate your finances. For the best chances of approval, you'll likely need a credit score in the mid to high 600s, a debt-to-income, or DTI, ratio of 50% or better and stable income.
Compare rates. Get pre-qualified with several lenders to compare estimated rates and terms. The lenders on this list will show you an offer without affecting your credit score.
Choose a lender and complete the application. Some lenders require documentation to verify information like your income. Depending on the lender, you may be asked for the following as part of the formal application:
Loan income verification statement.
Proof of employment or income.
Proof of residency.
Identification.
Graduation information.
Sign the final documents and wait for loan payoff. Once underwriting is complete, you’ll need to sign final paperwork to accept the loan.
- Student loan refinance rates
Private student loan interest rates can be fixed or variable. The rate you receive depends on factors such as credit history and income.
If you opt to federally consolidate your loans instead of privately refinancing them, your interest rate will not necessarily decrease. Interest rates for Direct Consolidation Loans are the weighted average of interest rates for the loans you are consolidating, which could increase your interest rate slightly. The benefit is a fixed interest rate that will not change over time.
- Should I refinance my student loans?
Refinancing student loans is usually best for those with strong credit and stable income, since this often results in better loan terms.
- Student loan terms to know
Deferment: A period of authorized nonpayment that pauses student loan payments for up to three years. Deferment can be a good option if you have a federal subsidized and can’t afford to make payments now, but will be able to soon. If you need a longer-term fix, consider income-driven repayment instead.
Delinquent: The status of a student loan after one or more missed payment. Loans enter default after a prolonged period of delinquency. While you will probably face late fees, you can avoid credit damage and default by quickly paying the past-due amount.
Disbursement: The process of releasing loan funds to the borrower or directly to the school.
Fixed interest: An interest rate that does not change during the life of a loan. All federal student loans have fixed interest rates, but private loans can offer fixed or variable interest rates. Fixed interest is the safer option because you don’t have to worry about your rate — and payment — increasing.
Variable interest: Variable interest rates can change monthly or quarterly depending on the loan contract and come with rates caps as high as 25%. Variable interest loans are riskier than fixed interest loans but can save you money if the timing is right.
Origination fee: The fee a borrower pays to offset a lender’s cost for issuing a student loan. All federal student loans have origination fees, while many private student loans don’t. Origination fees typically have a minimal effect on undergraduates with lower loan amounts, but can be costly for graduates and those with higher loan totals.
Prepayment: Prepayment is when you pay off part or all of your loan before the scheduled due dates.
