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Business school graduates are excellent candidates to refinance MBA loans. Because an MBA degree comes with MBA student debt (the average grad school debt is $66,300) and a bigger salary, choosing to refinance your MBA loans could save you thousands of dollars.
- Why you should refinance your MBA loans
- How much can I save if I refinance my MBA loans?
- How to qualify for refinancing
- Should you refinance MBA loans?
Why you should refinance your MBA loans
Expensive federal student loans and private student loans can hold you back from so many other ventures in your life, like buying a home, getting married, or growing your family. There are a few reasons refinancing student loans can be a smart move.
- It could lower your interest rate. Getting a lower interest rate means you’ll pay less in total over the lifetime of your loans. The less interest, the less extra money you owe back to your lender. A lower rate isn’t guaranteed, so try exploring all your options with many different lenders first.
- It could lower your monthly payment. Being able to afford your monthly payment is crucial to building and maintaining a solid credit score. The more on-time payments you have, the more your score climbs; the longer you go without making payments, the more it lowers. Lowering your monthly payment gives you the chance to be able to afford your monthly payment so you can pay on time.
- You can combine multiple loans into one. If you have many different loans from many different lenders, keeping track of your payments can be difficult. Refinancing can combine them into one, convenient payment. This is helpful even if all your loans are from the same lender or loan servicer (like the Department of Education).
Keep in mind, though, that when you refinance your federal loans, you’ll lose access to a number of federal programs that could help, including income-driven repayment plans (like income-based repayment) and forgiveness programs (like Public Service Loan Forgiveness). So make sure you won’t need access to these programs before you get a refinance loan.
How much can I save if I refinance my MBA loans?
Let’s say you’ve recently graduated and you owe about the average MBA debt of $66,000. Your interest rate is 6.31% and you had Direct PLUS Loans to fund your education.
Right now you’ll probably pay around $743 a month over a 10 year term (on one of the typical repayment plans). Over the life of the loan, you’re going to pay $89,166. If you refinance, you could get an interest rate as low as 4.61%, lowering your monthly payments by $56 and your total by $6,664.
|What you pay now ...||If you refinance ...|
|Interest rate||6.31% APR||4.61% APR|
|Total repayment cost||$89,166||$82,502|
Refinancing isn’t for everyone, so make sure the loan terms are in line with your budget and financial future. But if you’re still on the fence, check out our student loan refinancing calculator to see how much you can save.
How to qualify for refinancing
To get the most out of your MBA refinancing, you’ll want to make sure you’re an ideal refinancing customer. Besides being a U.S. citizen or permanent resident (or having a co-signer that meets this criteria), here’s what a private lender is looking for when choosing the best candidates.
- Credit score and credit history: The higher your credit score, the more likely you are to qualify for a loan. Along with that, the lower your interest rate will be. If you’re hoping to refinance but your credit report isn’t in the best shape, work on building it up first. Pay down other debt like credit cards, get bad marks removed, and make consistent payments.
- Income: It’s difficult to take out a new loan if you can’t prove you can pay it back. If you don’t have reliable income coming in on a regular basis, you may want to hold off on refinancing. It’s important to show lenders that you’re serious about borrowing money that you’ll pay back on time every month. Along with that, how much you earn matters as well. It can determine how much you can refinance and your interest rate.
- Cosigner: If you don’t have a great credit score or a solid paycheck to prove your creditworthiness, you’ll likely need to find someone who can. Getting a cosigner means they’re going to be responsible for the loan too in case you aren’t able to pay it back.
The student loan consolidation companies in the table below are Credible’s approved partner lenders. Because they compete for your business through Credible, you can request rates from all of them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like.
|Lender||Variable rates from (APR)||Fixed rates from (APR)||Check rates from multiple lenders in 2 min|
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Citizens Bank Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate ("LIBOR") published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of July 1, 2020, the one-month LIBOR rate is 0.18%. Variable interest rates range from 2.49%-8.38% (2.49%-8.38% APR) and will fluctuate over the term of the borrower's loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 3.20%-8.63% (3.20%-8.63% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
Should you refinance MBA loans?
If you refinance or consolidate your student loans, you can significantly cut down the cost of your repayment. But before you start the student loan refinance application process, make sure you’re a good candidate. Make sure you qualify, can afford the loan payments, and are getting the best deal around by comparing student loan refinancing companies.