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Refinance Student Loans

When preparing for college, one of the first things most students do is fill out a Free Application for Federal Student Aid (FAFSA) with the U.S. Department of Education. This gives you access to financial aid, including grants (essentially free money for college), federal work-study, and federal student loan programs.

As a general rule, federal student loans are better than private student loans when it comes to financing the portion of your college education not covered by grants, scholarships, or savings.

This is because federal student loans are backed by the federal government, have some of the most minimal eligibility requirements, and offer some of the best rates and repayment plan options. In addition, federal student loans generally do not require a co-signer.

That said, there are limits to how much you can borrow in federal student loans. If you reach that limit and still need funding to cover the cost of education, private student loans can help you out. This page aims to provide you with everything you need to know about private student loans.

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The Benefits of Refinancing Student Loans

Refinancing your student loans can come with many benefits. We’ve briefly mentioned a few above, but you can find a more detailed list here.

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Lower Interest Rates

If done wisely, refinancing can lower your interest rates, which not only can lower your monthly payment but also lower the total cost of the loan over the life of the loan. Be careful, however. If you refinance with a longer repayment term, this can negate the net effect of a lower interest rate. It’s a good idea to do the math and determine the total repayment amount for each new loan option.

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Reduced Monthly Payments

Depending on which lender you choose, you may have the option for more flexible repayment terms when you refinance your student loans. If you choose a longer repayment term, for instance, this could help you lower your monthly payment.

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Better Repayment Terms

When you refinance, your repayment terms can also change for the better. Depending on your financial situation, you might find longer repayment terms better because they lower your monthly payment, or you might find shorter terms better because you can pay off the loan more quickly and with less interest. (Note that lenders generally don’t charge prepayment penalties, so paying off loans sooner is usually an option, regardless of your current repayment plan.)

Different lenders also have different policies about missed payments, forbearance, and deferment. Always make sure you know what they are to determine if the differences are in your favor.

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Student Loan Consolidation

Refinancing is an opportunity for consolidating. When you refinance through a new lender, your existing loans are paid off, and you just have a single loan from your new lender and one monthly payment. Consolidating doesn’t necessarily result in lower monthly payments, but it can simplify repayment significantly. Note that moving to a federal Direct Consolidation Loan is free for your federal student loans.

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Free Your Co-Signer

95% of private student loans require a co-signer, but many of these private student loan lenders will also offer a “co-signer release” after a certain number of on-time payments (and a stringent credit and income test to determine the borrower’s eligibility). While not all lenders will offer a co-signer release, one way to free the co-signer on your original student loan debt from any responsibility is by refinancing and taking out the new loan in your name only.

A Note About Federal Student Loans

As you consider your refinancing options, what decisions you make may depend on whether you have federal student loans, private student loans, or both. When it comes to federal education loans, there is a wide variety of repayment options – many more than you will likely find with any private lender – including several income-based repayment plans.

Because of this, it’s often in your best interest to work with your federal loan servicer to adjust payment options as needed if you’re having difficulty making payments or to arrange forbearance or deferment. It’s also possible to consolidate your federal loans with your federal loan servicer so that you only have one student loan payment each month and a fixed interest rate (the weighted average of all current rates rounded up to the nearest eighth of a percent).

The federal student loan program also has options for loan forgiveness, such as its Public Service Loan Forgiveness program or the Teacher Loan Forgiveness program. In extenuating circumstances, like COVID-19, student loans may also be frozen, requiring zero payment. If any forgiveness option applies to you, it’s definitely in your best interest not to refinance your federal loans with a private lender.

While going from federal student loans to a private lender when refinancing can limit your repayment options and limit access to loan forgiveness programs, if the lowest rates are coming from a private lender, it may still be a financially sound decision to refinance federal student loans with a private lender.

However, note that while federal loans can be refinanced with private lenders, private loans can’t be consolidated with a federal loan. So, when it comes to refinancing your private student loans, your goal is to find the best private lender – whether it’s a bank, credit union, or online lender – with the best rates and terms.

What You Need to Do to Refinance Student Loans

Here, we break down everything you need to know about student loan refinancing, including how to do your research and find the right loan, the application process and what it takes to get approved, and how to repay the new loan.



Before choosing a lender, you need to do your research and compare prospective lenders. Keep in mind, as mentioned, that refinancing federal student loans comes with different considerations.

The following are some things to explore for each lender you’re considering:

  • How interest rates compare
  • Whether variable- or fixed-rate loans are available
  • What the loan minimums and loan limits are
  • If there are any origination fees
  • If discounts are offered for making automatic payments
  • Repayment plan options and repayment terms
  • How the lender determines creditworthiness
  • Whether there are any special offerings or borrower benefits, like an annual skipped payment, access to a financial adviser, or a loyalty discount for borrowers who need to open a new account

List your top choices and carefully weigh the pros and cons of each. Note that some lenders will allow you to prequalify with a soft credit check, after which you’ll be able to see what rates you have qualified for. This can help you decide between your final choices.



Once you’ve done your research and chosen a lender, it’s time to apply and complete the loan application. If you are new to using credit cards or your credit report score is less than desirable, you will want to enlist a co-signer to improve your possible loan rates or odds of qualifying.

While loan applications vary, you will typically be required to provide your personal information, and they will look at your credit report, other debt, and income history. You can often complete these applications online.

Note that the decisioning process usually happens fast, and many private lenders respond quickly to loan applications. Still, it’s a good idea to complete the process at least a few weeks before you hope to be on a new payment plan. Always keep paying on your existing loans until the new loan is complete.



Once you accept the new loan, the new lender will pay off your existing loans and begin sending you monthly bills for repayment. Make sure you keep up with on-time payments so that you can avoid late fees and credit problems down the road.

Ask if autopay is an option. Autopay makes it easy to submit payments on time, and it usually comes with a slight interest rate discount. You should also consider making extra payments to pay the loan off early, if possible, since doing so will save you money in the long run.

If you find that you’re unhappy with your new loan terms – or if prevailing interest rates go lower – it’s possible to refinance again.

Individual Student Loan Refinance Provider Fact Sheet

As mentioned, it’s important to do your research. aims to make that easier for borrowers in repayment by doing the legwork for you. Below are individual fact sheets for each provider.

Refinancing Student Loan FAQs

Check below for answers if you still have questions about refinancing your student loans.

The best time to refinance your student loans is when you’re in a strong financial position and interest rates are low. After working for a few years, you’ll have had time to build your credit history and show consistency with repayment. This makes you attractive to prospective lenders.

There can be. If you refinance at a higher interest rate or for longer repayment terms, the refinance can end up costing you more money in the long run. If you have federal student loans and refinance them with a private lender, you may miss out on the flexibility and loan forgiveness options available.

In general, you don’t pay any additional money upfront. In fact, you might even get to skip a payment if the timeline works out.

Which lender is best can vary based on your financial situation, goals, and amount of debt. Check out our list of the top student loan refinance lenders above to learn more.

Refinance Your Student Loans Today

If you’re ready to refinance your student loans, let help you with the research and provide you with everything you need to know about paying off student debt. Click the links in the lender fact sheet to learn more about each refinance option.

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