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How Can I Refinance My Student Loans (+ Top-Rated Lenders)

Most people ask “How can I refinance my student loans?” The answer is simple: locate multiple lenders who will give you a cheaper interest rate. Compare them to one another. Apply for one of the best rates possible.

If you’re accepted, the new lender will repay your previous one. You’ll continue to make monthly payments to the new lender in the future.

In this post, we’ll discuss how to refinance student loans, what to do to get accepted, and most of the top-rated lenders.

5 Simple Steps To Refinance Your Student Loan

Step 1: Is Refinancing The Right Thing?

Refinancing may make sense if it can help you save money, but not everyone should do it. 

To qualify for the lowest rates and fulfill a refinance lender’s eligibility requirements, you’ll need good to excellent credit and finances.

The coronavirus pandemic has damaged the ability of federal student loans to join government initiatives such as income-driven repayment and student loan forgiveness.

If your employment is not in danger and you do not anticipate needing these alternatives, don’t refinance federal student loans.

Because you’ll lose your eligibility for government programs and safeguards like income driven repayment plans, which alter your monthly payments if you can’t make them.

On the other side of the coin, refinancing private student loans has a few disadvantages. Private loans are not eligible for those federal benefits.

Step 2: Research Lenders and Get Multiple Rate Estimates

The majority of student loan refinance lenders are comparable.

However, certain characteristics may vary depending on your circumstances.

Then, after gathering rate quotations from all lenders that meet your requirements, make a selection.

Finally, the lender who offers you the lowest rate is the one to go with.

You may compare rates from several student loans refinance lenders at once, or you can visit each lender’s website individually.

When you look for a lender, you’ll see that some have pre-qualification requirements.

Some lenders will request information such as your credit score, debts, and other financial details to provide the best possible estimate of your rate of interest.

Lenders will not display a rate until you submit a complete application, but this is a genuine offer.

The majority of soft credit checks have little to no impact on your credit scores.

A genuine loan applications necessitates a hard credit check that may temporarily reduce your credit scores.

Step 3: Make Your Choice and Negotiate the Terms of the Loan

Once you’ve found a lender, you’ll have to make a few more selections:

  • Which do you wish to have: a variable or fixed interest rates?
  • How long do you want your loan term to be?

Tip: For the most part, fixed-rate loans are preferable to variable-rate loans.

Variable rates are typically lower at first, but they can rise or fall depending on market conditions.

Choose a repayment term that is as short as possible while still allowing you to pay it off in the least amount of time.

If you want to focus on other expenses while making lower monthly payments, pick a longer payback schedule.

Step 4: Fill Out The Application

Even if you’ve been pre-approved, you must complete a full application with a lender to proceed.

You’ll be requested to submit additional information about your loans and financial situation, as well as supporting paperwork.

You’ll need documents that include the following:

  • Loan or payoff verification statements.
  • Provide proof of employment.
  • Proof of residency.
  • Proof of graduation.
  • Government-issued ID.

Eventually, you must authorize the lender to conduct a hard credit check to verify your interest rate.

Tip: You’ll have the option of refinancing with a co-signer, which might assist you to get a lower rate.

More: Can I Refinance Student Loans During My Grace Period?

After Approval

If you’re accepted, you’ll need to complete some last documents to accept the loan.

Once you sign the final disclosure document after three days have elapsed, your right to rescind expires.

During this time, you may cancel your refinancing if you change your mind.

If you got rejected, The lender will notify you if you are denied.

If you have bad credit and want to refinance, you may be able to do so if you add a co-signer or reduce your debt-to-income ratio.

Step 5: Wait For the Loan to be Paid Off

Your new lender will pay off your existing lender or servicer once the rescission period has ended.

You’ll continue to make monthly payments to your new refinance lender going forward.

Continue making payments to your existing lender or servicer until you receive confirmation that the procedure is finished. And don’t worry you’ll get a return if you overpay.

Use Our Calculator To Estimate How Much You Could Save

Student loan refinancing calculator

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)

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Financeive Rate
Interest Rates
5/5
Loan Amounts
4.7/5
Customer Experience
4.9/5
Availability
5/5
Approval Rate
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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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More: Student Loan Refinance Calculator

How To Get Approved For Student Loan Refinancing

Here are the easiest 5 ways to get student loan refinancing approved:

1. Pay off other debts: Don’t worry if you have other debts. If you can, pay off some of your other debts to reduce the amount owed. You should be a good candidate as long as you have enough cash flow each month to fulfill your financial obligations.

2. Lower your debt-to-income ratio: The lower your debt-to-income ratio, the better it is. You can raise your debt-to-income ratio by increasing income or decreasing expenses (or both).

3. Have a Good to Excellent Credit Score: The best student loan lenders demand a credit score of 675 to 790. However, some lenders do not have a minimum credit score requirement.

4. Have a steady and consistent stream of income: Lenders will have greater confidence in your ability to make monthly student loan payments if you have a regular salary coming in every month. It might be more difficult to refinance student debts if you don’t have a reliable monthly income.

5. If you don’t meet the requirements, get a co-signer: A qualified co-signer with a good credit score and monthly income can help you get approval if you don’t have enough money on your own.

You may also like: How To Transfer Student Loans To Another Lender

How To Get Student Loan Savings Estimates that Results of Refinancing

To figure out how much money you’ll save by refinancing, and if it’s worth it for you, you’ll need to use actual rates based on your financial situation.

Because each lender has its underwriting criteria, which define who is accepted for a loan and at what interest rate, you’re likely to get different rates at every firm you call.

Here’s how to do comparisons between several lenders in 3 steps:

1. Estimating Your Rates

Visit the websites of several top student loans refinance providers to get an idea of the interest rate you may anticipate from each one.

Pre-qualification is when a lender performs a soft credit pull (do not hurt your credit) to see whether you’ll qualify for the interest rate they offer.

If you don’t have a pre-qualification from your lender, you’ll need to fill out an application before you can view personalized interest rates.

If you apply for many refinance loans within a short period, the credit agencies typically treat it as a single hard inquiry, which keeps your score intact.

2. Examine the Interest Rates that Various Lenders Provide

After you’ve received a few estimates or offers, compare them side by side based on their annual percentage rates (APR).

The actual borrowing cost, including any fees that may be levied, is represented by APRs.

3. Consider Other Loan Features

To save the most money, get the lowest possible interest rate. Also, keep an eye on loan terms and repayment alternatives.

If you’re not sure how long the cash from your refinancing will last, pick the term length that is similar to your existing loans.

You could also see whether you can get a student loan to refinance the bonus.

Is There Any Fee to Refinance Student Loans?

There are no costs involved with refinancing your student loans. This is true whether you want to reduce your interest rates or change your monthly payments.

However, there are a few frequent student loan fees to be aware of:

  • Fees for collecting defaulted loans.
  • You’ll be charged a prepayment penalty if you pay off your loan before the end of the term.
  • If you don’t pay your bills on time, you’ll be charged late fees.

What Is the Required Debt-to-Income Ratio to Refinance your Student Loans?

When refinancing student loans, lenders often look for borrowers with debt-to-income ratios below 50%.

Lenders calculate your debt-to-income ratio by dividing your gross monthly income by your total monthly loan payments and other financial commitments.

If your DTI is high, pre-qualify for student loan refinancing to see if you meet extra lending conditions.

Do I Need Income to Refinance Student Loans?

To refinance your student loans, lenders frequently require a minimum income. At the very least, you’ll need to make $24,000.

However, the minimum income requirement and the genuine average yearly income of individuals who are eligible for student loan refinancing frequently differ significantly.

Whether you are unemployed, a student, or a recent college graduate without sufficient work experience, refinancing your student loans can be tough.

With a signed employment offer, some lenders can restructure student debts for medical residents or third-year law school students.

You could refinance with a co-signer if you don’t have a job (or even a side hustle).

Is It Hard to Get Approved for Student Loan Refinance?

To be eligible for student loan refinancing, you’ll need good or excellent credit.

If you’ve been turned down for refinancing, keep trying to see if this is a viable option for you.

Check the lender’s requirements if you’re not sure if you qualify.

Is It Wise to Refinance my Student Loans?

If you find a lower interest rate and wish to combine all of your student loan payments, you might consider refinancing.

While refinancing is a smart choice in many circumstances, it isn’t right for everyone, especially those who need to use federal student loan safeguards.

If you have a private student loan that you want to refinance, refinancing makes sense if you can save money on interest or reduce your monthly payments over time.

On a $50,000 loan, lowering your interest rate by %1 point over 10 years may save you around $26 per month and $3,600 in interest.

How Often Can I Refinance My Student Loans?

If your financial status improves or student loan refinancing rates drop, you can refinance your student loans as often as you want.

Every 2 years or so, with a minimum of 1 year, is a good refinancing benchmark.

What If Refinancing My Student Loans Couldn’t Save That Much?

You might be able to get a better refinancing rate if you:

  • Refinance with a cosigner: If you have solid credit and a stable income, a cosigner may be able to help you achieve a lower interest rate.
  • Reduce the length of your new loan: Shorter payback terms result in cheaper interest rates, and vice versa. You’ll save money on interest over time because you’re paying off the loan faster.
  • Compare multiple student loan lenders: It’s vital to shop around with a few different lenders to ensure you’re getting the best deal possible. Many private student loan lenders will let you prequalify with a soft credit inquiry to see what your anticipated interest rate will be without hurting your credit score.

Will My Student Loans Be Forgiven If I Refinanced?

No, you won’t receive federal student loan forgiveness or government programs like income-driven repayment.

You want your student loans forgiven. When federal loans are refinanced, they become ineligible for federal loan forgiveness programs such as Public Service Loan Forgiveness and Teacher Loan Forgiveness.

Frequently Asked Questions