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How To Get The Best Student Loan Refinance Rate

Refinancing is the process of replacing your existing student loans with a new private loan that offers better terms, such as a lower interest rate.

Refinancing your loan can save you money and is a good option for people who have good credit or a trusted co-signer.

Refinancing and lender discounts can lower student loan interest rates.

A lower interest rate on your student loan could lower your monthly payments or allow you to pay off your debt faster.

Here are 3 ways to lower the interest rate on your student loan refinance.

3 Ways to Lower Your Student Loan Refinance Interest Rate

1. Refinance Student Loans With Co-signer

how student loan rates are affected with a cosigner

A cosigner with good credit and a steady income may be able to assist you to get a cheaper interest rate.

If you default on your payments, your cosigner will be held liable, but the good news is that some lenders may eventually let the cosigner off the hook if the principal borrower makes on-time payments for a set period.

Here are some lenders refinance student loans with cosigner support

LenderFixed APRVariable APRMin. credit scoreCosigner release
Lend-Grow*2.15% – 5.85% 1.80% – 5.28% 680Yes
CommonBond*4.44% – 8.09% 4.49% – 7.74%660Yes
Splash Financial*1.74% – 7.49%1.99% – 7.84%650
660 (with cosigner)
Yes

Note: We have an “*” after the link, so we’ll get some of your purchase prices as commission – but only if you went through us first!

Here’s how to apply for a co-signer refinance:

  • Find a lender who will accept cosigners for student loan refinancing: your first step should be to look into the policies of various lenders. Finally, allowing a cosigner isn’t the only qualification you should seek in a refinance lender.
  • Get a cosigner for the refinance of student debts: You must ask your cosigner if they are willing to be your student loan cosigner, and ensure that both of you are aware of the hazards.
  • Gather the necessary paperwork and information to apply: You’ll need the basic personal information for both you and your cosigner. Gather your SSN, work details, financial information, monthly mortgage or rent payments, and permanent residence.
  • Start comparing student loan refinancing rates: To perform a soft credit pull, most lenders require preliminary information. This provides them an idea of your creditworthiness and allows them to give you an estimate of the rates and terms you might be eligible for.
  • Refinance your student loans: Now is the moment to refinance your student loans. Make certain that you and your cosigner both have accurate information.
  • Pay down your refinanced student loans with the help of a cosigner: You and your cosigner will begin making monthly payments once you’ve signed on the dotted line.

2. Reduce The Term Of Your New Loan

Interest rates are lower when repayment terms are shorter, and vice versa.

Because you’re paying off the loan faster, you’ll save money on interest over time.

A shorter payback term, on the other hand, will result in larger monthly payments, so this isn’t recommended if you’re attempting to pay a little monthly payment.

If you choose a variable-rate loan, you may be able to get a lower rate.

Fixed-rate student loans carry the same interest rate throughout the loan’s term, but variable-rate loans may alter over time.

However, broader economic forces outside your control may cause your lender to raise (or lower) your interest rate over time. This is why many borrowers opt for fixed-interest student loans.

However, because private lenders cannot levy fees such as an origination fee or a prepayment penalty, you would have nothing to lose if interest rates rose.

To discover how a shorter term or variable-rate loan can affect the total interest paid over time, use a student loan refinancing calculator.

You can acquire the lowest rate with the shortest period, but be sure that paying less during the loan with a lower interest rate comes at the cost of a higher monthly payment.
Helhoski

More: Refinance My Home to Pay Off Student Loans: Is It Make Sense?

3. Look Into Several Student Loan Lenders

While federal student loan rates are determined by the year you took out the loan, private student loan rates are determined by a variety of criteria.

Lenders look at the loan length and amount, as well as the borrower’s credit history, to evaluate eligibility and establish interest rates.

That’s why it’s critical to shop around with several lenders to ensure you’re getting the best deal for your scenario.

Many private student loan lenders allow you to prequalify with a soft credit inquiry to check your estimated interest rate without affecting your credit score.

This allows you to choose the lender with the best terms.

Getting the greatest student loan refi depends on your qualifications, as well as how effectively you search around.
Anna Helhoski, student loans expert at NerdWallet
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How Much Interest Could You Save By Refinancing?

Student loan refinance calculator

Step 1: Know what you owe

How much can refinancing save? Enter details of your existing loan

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Step 2: Estimate your new rate

The better your credit, the lower the rate you’ll likely get. If you have bad credit, the best thing you could do is using a co-signer

Fixed APR: 2.15% – 5.85%. Variable APR: 1.80% – 5.28%. + ($500 Gift)

5

Financeive Rate
Interest Rates
5/5
Loan Amounts
4.7/5
Customer Experience
4.9/5
Availability
5/5
Approval Rate
5/5
Fixed APR: 1.99-5.79%. Variable APR: 1.74% to 8.27%

4.5

Financeive Rate
Interest Rates
4.4/5
Loan Amounts
5/5
Customer Experience
4.6/5
Availability
5/5
Approval Rate
5/5
Fixed APR: 2.49-7.04%. Variable APR: 1.98-7.14%

4.8

Financeive Rate
Interest Rates
4.7/5
Loan Amounts
4.5/5
Customer Experience
5/5
Availability
5/5
Approval Rate
5/5
Fixed APR: 2.69-7.93%. Variable APR: 2.05-5.25%. Min. credit score: 660.

4.6

Financeive Rate
Interest Rates
5/5
Loan Amounts
3.5/5
Customer Experience
5/5
Availability
5/5
Approval Rate
5/5

Step 3: Know how much you could save

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5 Alternatives to Reduce Your Student Loan Rate

1. Switch To Automatic Payments

Your student loan servicer can automatically debit your monthly payment from your bank account if you choose autopay.

If you set up autopay, you’ll almost certainly get a lower interest rate (typically 0.25% or more) and won’t have to worry about missing a payment.

Although refinancing is the most common way to lower your interest rate, you can save money even if you don’t refinance by enrolling in autopay.

When you sign up to have your payments regularly debited from your bank account, you can save 0.25% on federal loans and many private lenders.

The automated clearinghouse is sometimes referred to as an ACH discount. To see if the reduction applies to your loans, contact your servicer.

Additionally, autopay can help you avoid missing a payment. just ensure you have enough money in the bank each month.

2. Take Advantage of a Loyalty Discount

Some lenders offer loyalty incentives in addition to the ACH discount. To qualify for a loan discount, you must have an approved account with the lender at the time of application.

For example, some lenders offer a 0.125% reduction to their borrowers who have previously borrowed from them.

Although fractions of a percentage point may not seem like much, they build up. Saving 0.25% in interest on a $30,000 debt with a 6% interest rate would net you $450 over ten years.

If you got a 0.50% decrease by combining the ACH and loyalty discounts on the same loan, you’d save almost $900 over 10 years.

3. Finish high-interest student loans first

If you’re making extra payments on your student loans, go for the ones with the highest interest rate.

But don’t forget about your other debts, to avoid defaulting, pay the minimum amount due on all of your debt each month.

4. Faster Loan Repayment

It’s easier said than done with this one. You may pay off your student loans early and save money on interest if you tweak your budget or establish a second gig.

If you make a larger payment than the minimum, ask your lender or federal student loan servicer to apply the additional funds to your current balance rather than your next payment.

5. Maintain The Standard Repayment Schedule

If you stick to the usual federal repayment schedule, you’ll be done paying your loan in 10 years.

While income-driven plans may appear enticing since they reduce your monthly payment, they also increase your total interest paid.

The Bottom Line

Reducing your interest rate is one strategy that may help you pay off your student loans faster.

However, it is not the only effective technique. Being financially aware is the most effective strategy to save money over time.

Try to figure out why you aren’t eligible for a reduced interest rate. Your credit score may be holding you back.

Improving your credit will benefit you not only with student loans but also with other sorts of finance.

Frequently Asked Questions