Refinance Your Student Loans and Save!

Refinancing your student loans could save you lots of money each month – and maybe thousands of dollars over repayment.

Many lenders are eager to help you refinance one or more of your existing loans into a new loan. Check out a comparison of student loan refi options from our lender partners below.

Things to consider when refinancing your student loans

How does the refinancing process work?

The process is pretty straight forward. First, shop around for the lender with the best deal for you (that’s where we can help!). Next, complete an application process for the new loan. The lender will collect the usual information from you: income, credit score, cosigner if applicable, and information on the student loans you want to refinance. Finally, if you’re approved, the lender will pay off the existing student loans directly. The application process is quick; the loan payoff process can take a couple weeks, but the lender does the legwork.

Why should I even do this?

Aside from the convenience of having one loan to deal with, rather than several, the main reason graduates refinance their student loans is to save money, in one way or another.

Lower Monthly Payment

Usually, the goal is to save money on a monthly payment basis. In the first several years out of school, student loan borrowers may have very high monthly loan payments, relative to their initial income levels. By achieving a lower interest rate and/or lengthening repayment, your refinanced loans might cost you less each month than the existing loans. Note that lengthening repayment, does mean you’ll be paying interest on the loans over a longer period of time. That *might* be okay, if you plan to repay them before they’re ultimately due. But the lower payment vs longer repayment is the key tradeoff you should consider.

Lower interest rate

For many borrowers, the interest rate on their new refinance loan is lower than the blended average of the rates on their original student loans.

Lower total cost

Some borrowers will achieve a lower total cost of borrowing (meaning the total of all payments) by refinancing. This occurs because of the lower interest rate and/or a shorter repayment period.

Student Loan Refinancing FAQs

How much is too little to refinance? If it saves you money, no amount is too small. However, many lenders are reluctant to refinance less than $10,000, but it might still be possible. Shop around to find a lender who will make small refinance loans.

How much is too much to refinance? There generally isn’t a maximum amount a lender will impose on refinancing. If you have a very large amount education debt, your potential savings could be substantial. Borrowers commonly refinance amounts well over $100,000, so the big loans aren’t unusual.

Can I refinance federal loans? Yes. But be aware that when you refinance federal loans into a new loan from a private lender you will lose some preferable repayment provisions (deferment, forbearance, etc). If you only have federal loans, you should research alternative loan repayment options, including those based on your income. You might also consider federal loan “consolidation,” which is a new federal loan that replaces your original federal loans(s). The consolidation loan has many of the borrower-friendly repayment options of your original federal loan(s).

Will I get approved for a student loan refinance loan? Approval criteria vary by lender, but the main things they are looking for are a strong credit score and income sufficient to service all your debt: your student loan refinance loan and all other obligations. Borrowers usually need a credit score of 680 or better (a few lenders might go lower). A debt-to-income (DTI) ratio no higher than 45-50% (meaning that your total debt payments aren’t more than 45-50% of your monthly gross income) is typically required. Some lenders make exceptions to these requirements if you have a cosigner who does meet these requirements.

 

Lower your monthly payment by refinancing