Should I Refinance My Federal Student Loans?

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Federal student loans can be a good way to pay for college, especially because they come with borrower protections.

But if you have good credit, you might be able to save more money with a lower interest rate if you refinance federal student loans. But you’ll want to consider the pros and cons first.

Here’s what to know before you refinance federal student loans:

• Can I refinance my federal student loans?
• Should I refinance my federal student loans?
• Benefits and risks of refinancing
• Refinancing vs. consolidation
• How to refinance federal student loans
• Federal student loan refinancing FAQs

Can I refinance my federal student loans?

Yes, you can refinance federal student loans like most other types of student loans. When you refinance a federal student loan, you’ll pay it off with a new private student loan.

If you refinance your federal loans, you’ll lose access to federal benefits — including income-driven repayment plans and student loan forgiveness programs.

Should I refinance my federal student loans?

While refinancing federal student loans isn’t right for everyone, here are some scenarios where it might make sense to consider refinancing your federal student loans with a private lender:

• You have high-interest loans: If you took out loans during a period when interest rates were higher, or you have graduate loans, you may be able to secure a lower rate through refinancing — especially if you have good to excellent credit.
• You’re not eligible for forgiveness: If your career doesn’t align with the requirements for loan forgiveness or repayment assistance programs, it may make sense to find your own solutions for paying down debt through refinancing.
• You have a solid, stable income: Other reasons for federal student loan borrowers to stay put are the U.S. Education Department’s income-driven repayment plans and generous forbearance and deferment options. But if you don’t anticipate needing those, refinancing could provide more benefits to you.
• You want to pay off your loans faster: The minimum repayment term with federal loans is 10 years, but with refinancing, you may be able to cut that down to five years. Just be sure you can afford the higher monthly payments.

Is refinancing student loans a good idea right now?

Due to the COVID-19 pandemic, federal student loan payments and interest accrual have been paused by the CARES Act and subsequent extensions by the federal government. The pause is set to expire on September 1, 2023. If you refinance your federal student loans, you’ll no longer be eligible for this administrative forbearance.

Because of this, it might be a good idea to wait before refinancing your federal loans.

Learn More: Up to $20K in Student Loan Forgiveness for Some Borrowers, and Payments Remain Paused

Benefits and risks of refinancing

While refinancing your federal student loans might be a good choice in some cases, it isn’t right for everyone. If you’re thinking about refinancing your student loans, it’s important to consider the pros and cons first.

Advantages of refinancing

Here are some of the benefits of refinancing to keep in mind:

• You could get a lower interest rate. If you refinance, you might qualify for a lower interest rate, which could save you money over the life of your loan.
• You could get a lower monthly payment. If you choose a longer repayment term, you could get a lower monthly payment. Just keep in mind that extending your repayment means you’ll pay more in interest over the life of your loan.
• You could pay off your loans sooner. If you’re able to get a lower interest rate by refinancing, you’ll have fewer interest charges over the life of your loan. Because of this, you might be able to pay off your loan faster than if you hadn’t refinanced.
• You can combine loans. Refinancing multiple federal loans into one private loan can simplify your finances because you’ll have just one monthly payment instead of several.
• You can transfer Parent PLUS Loans. If you took out Parent PLUS Loans to help pay for your child’s education, some lenders allow you to refinance and transfer that debt to your child once they’ve graduated and can meet the eligibility requirements.

If you choose to refinance, be sure to consider as many refinancing lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in just two minutes.

Lender	Fixed rates from (APR)	Variable rates from (APR)	Loan terms (years)	Loan amounts
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	3.99%+	5.35%+	5, 7, 10, 15, 20	$10,000 up to $250,000 (depending on degree)
Fixed APR: 3.99%+ Variable APR: 5.35%+ Min. credit score: 720 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: 720 Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 - $149,000 Max. Graduate Loan Balance: $200,000 - $400,000 Offers Parent PLUS Refinancing: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.89%+1	7.02%+1	5, 7, 10, 15, 20	$10,000 to $500,000 (depending on degree and loan type)
Fixed APR: 5.89%+1 Variable APR: 7.02%+1 Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.99%+2	6.99%+2	5, 7, 10, 12, 15, 20	$5,000 to $300,000 (depending on degree type)
Fixed APR: 6.99%+2 Variable APR: 6.99%+2 Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.0%+5	8.07%+5	5, 10, 15, 20	$1,000 to $250,000
Fixed APR: 6.0%+5 Variable APR: 8.07%+5 Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 24 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.84%+3	5.28%+3	5, 7, 10, 12, 15, 20	$10,000 to $250,000
Fixed APR: 4.84%+3 Variable APR: 5.28%+3 Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.15%+4	8.5%+4	5, 10, 15, 20	$5,000 to $250,000
Fixed APR: 6.15%+4 Variable APR: 8.5%+4 Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee, returned payment fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.24%+	5.54%+	5, 7, 10, 15	Up to $300,000
Fixed APR: 5.24%+ Variable APR: 5.54%+ Min. credit score: 700 Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 15 Max. undergraduate Loan Balance: $125,000 Time to Fund: 10 to 30 days Repayment options: Immediate repayment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from an eligible institution Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: LendKey Technologies Inc. Max. graduate Loan Balance: $175,000 Credible Review: LendKey Student Loans review Offers Parent PLUS Refinancing: No
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.2%+	N/A	7, 10, 15	$10,000 up to the total amount of qualified education debt
Fixed APR: 6.2%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.34%+	N/A	5, 10, 15	$7,500 up to $250,000 (depending on highest degree earned)
Fixed APR: 6.34%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 - $249,000 Max. Graduate Loan Balance: $200,000 - $249,000 Offers Parent PLUS Refinancing: Yes
Compare personalized rates from multiple lenders without affecting your credit score. 100% free! Compare Now Trustpilot
All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures  | 8Nelnet Bank Disclosures

Drawbacks of refinancing

Here are a few of the risks to be aware of when it comes to refinancing federal student loans:

• Not all qualify. Depending on your credit history and finances, you may not be eligible to refinance your federal loans with a private loan. Even if you meet the minimum criteria, it might not be enough to secure more favorable terms.
• You’ll lose access to deferment and forbearance options. There are various situations that might qualify you for federal deferment or forbearance. If you refinance, you’ll no longer have access to these programs. Instead, the ability to pause payments will be at the discretion of your lender.
• You’ll lose access to income-driven repayment. Once you refinance, you can’t sign up for any of the income-driven repayment plans. Instead, your repayment options will depend on the terms from your lender.
• You won’t qualify for federal student loan forgiveness. Unlike federal student loans, a refinanced private student loan won’t qualify for student loan forgiveness programs.

Check out: Student Loan Refinancing Risks

Refinancing vs. consolidation

The terms refinancing and consolidation are often used interchangeably. However, they mean something different for federal student loans.

• Federal student loan consolidation: You can consolidate your federal loans into a Direct Consolidation Loan. While this won’t lower your interest rate, you can extend your repayment term up to 30 years to lower your monthly payments — though this means you’ll pay more in interest over time. Federal consolidation also lets you maintain your federal benefits.
• Private student loan refinancing: This process (also known as private student loan consolidation) lets you combine multiple student loans — leaving you with just one loan and payment to manage. Depending on your credit, refinancing might get you a lower interest rate. Or you could opt to extend your repayment term to reduce your payments. Just remember that refinancing federal loans will cost you access to federal benefits.

How to refinance federal student loans

If you’re ready to refinance your federal student loans, follow these four steps:

1. Shop around and compare rates. Be sure to compare your rates from as many lenders as possible to find a loan that fits your needs. This might include deciding between a fixed or variable rate, considering different loan repayment terms, and more.
2. Pick a loan option. After comparing lenders, choose the loan option that best suits your needs.
3. Complete the application. Once you’ve picked a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs. Also be prepared to provide information regarding each of the loans you want to refinance.
4. Manage your payments. If you’re approved, continue to make payments on your old loans while the refinance is processed. Afterward, you might consider signing up for autopay so you won’t miss any future payments — many lenders offer a rate discount to borrowers who opt for automatic payments.

If you decide that refinancing is right for you, you can easily compare your rates from multiple lenders with Credible after filling out a single form.

Find Out: Cost to Refinance Student Loans: Fees & Discounts Explained

Federal student loan refinancing FAQs

Here are answers to several commonly asked questions about refinancing federal student loans:

What types of loans are eligible?

Most federal student loans are typically eligible for refinancing, including Direct Subsidized Loans, Direct Unsubsidized Loans, and Parent PLUS Loans. You can refinance all or some of your federal student loan balance into a new private loan.

You’ll also need to meet the lender’s other requirements, which often includes a minimum credit score and verifiable income.

Learn More: How to Refinance Your Student Loans

Are there fees that come with refinancing federal loans?

You might have to pay fees when refinancing your federal student loans, depending on the lender. Some common fees include:

• Origination fees
• Loan application fees
• Prepayment penalties
• Late fees for missed payments

If you refinance through Credible, though, you won’t have to worry about prepayment penalties, loan application fees, or origination fees since our partner lenders don’t charge these. This could help you save money by refinancing with Credible right from the start.

Compare Rates Now

What credit score do I need to refinance student loans?

Every lender has its own requirements for refinancing student loans, which often includes having a minimum credit score to qualify. For example, most of Credible’s refinancing partners accept credit scores between 670 and 700.

If you don’t meet a lender’s credit requirements, having a cosigner with good credit might help you qualify for a loan.

Learn More: Refinancing Student Loans With Bad Credit

Do I need a cosigner?

Having a cosigner isn’t required for all refinance loans. If you have decent credit and income to qualify for a loan on your own, you won’t need one.

But keep in mind that even if you don’t need a cosigner, having one could help you qualify for a lower interest rate.

What happens if I can’t make my payments?

If you can’t make your payments on a refinanced student loan, it’s a good idea to contact your lender as soon as possible. They might have options to temporarily pause your payments.

If you’re dealing with a long-term financial hardship, you might consider refinancing again to extend your repayment period, as this could reduce your monthly payments. Just keep in mind that this can also lead to paying more in interest over the life of the loan.

Keep Reading: 11 Strategies for Paying Off Your Student Loans Faster

Ben Luthi contributed to the reporting for this article.

About the author

Eric Rosenberg

Eric Rosenberg is an expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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