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Refinancing your student loans could help lower your monthly payment, score a lower interest rate, or reduce your loans’ long-term cost.

But before you can reap those benefits, it’s important to understand how student loan refinancing works — especially if you’re considering refinancing federal student loans into private ones. In that case, you could lose access to valuable federal benefits such as income-driven repayment (IDR) plans and loan forgiveness for public service employees.

Here’s what you need to know about refinancing your student loans and 12 of the best student loan refinance lenders to consider.

How to refinance student loans

When you refinance student loans, a private lender pays off your existing loans and issues you a new one with a new interest rate and repayment terms.

Ideally, your new loan will feature a lower interest rate, saving you money over time. If your credit has improved since you took out your original loans, you may qualify for a better interest rate.

Refinancing works differently for federal and private loans, and it’s essential to understand the differences before applying for a student loan refinance.

Refinancing federal student loans

The federal government doesn’t refinance student loans, so you can only refinance your student loans with a private lender. You can combine most federal student loans into a single Direct Consolidation Loan.

But while student loan consolidation may streamline your loans into one payment, it’s not the same as refinancing. Your new interest rate will be based on the average of the existing federal student loans you’re consolidating, so it might not be lower. And there may not be any interest savings.

You can refinance federal student loans into private student loans, but you should think twice before doing so.

With the passing of the CARES Act in March 2020, people with federal student loans have had their interest rate set to zero. You won’t find a private student loan with 0% interest, so it probably doesn’t make sense to refinance federal student loans right now.

But even when federal student loan rates rise — and they will — it may not be to your advantage to refinance federal student loans with private loans. Refinancing to a private lender shuts you out of government protections, including IDR plans and student loan forgiveness programs. You also won’t be able to take advantage of pandemic-related student loan relief and any future legislation that benefits federal student loan borrowers.

Refinancing private student loans

The primary benefit of refinancing private student loans is to reduce your interest rate and save money throughout the loan term.

For example, the federal student loan rates for 2019-2020 for Direct PLUS Loans were 7.08%. If you have a Direct PLUS loan with this rate, you may be able to refinance your loan for a much lower rate and save a lot of money.

The first step to refinance your student loans is to apply through private lenders, who will use criteria such as your credit score and income to decide what rate to offer you on a new loan.

When you’re considering refinancing private student loans, it’s important to compare multiple lenders through a website like Credible.

Best student loan refinance companies

To find the loan that best suits your needs, consider as many lenders as you can. Rates and terms vary from lender to lender, so you’ll want to get actual rates to narrow down your decision.

Here are 14 Credible partner lenders to consider.

Advantage Education Loan

  • Rates: Fixed
  • Loan terms (years): 10, 15, or 20
  • Loan amount: $7,500 to $500,000
  • Minimum credit score: Does not disclose
  • Who it might be good for: Anyone refinancing a Parent PLUS loan. Borrowers can apply to release the cosigner after 36 months of consecutive on-time payments.

Brazos

  • Rates: Fixed
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amount: $10,000 to $400,000
  • Minimum credit score: Does not disclose
  • Who it might be good for: Borrowers who live in Texas

Citizens Bank

  • Rates: Fixed or variable
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amount: $10,000 to $750,000
  • Minimum credit score: Does not disclose
  • Who it might be good for: Existing account holders. Citizens gives existing account holders a 0.25% loyalty discount and another 0.25% discount for enrolling in autopay.

College Ave

  • Rates: Fixed or variable
  • Loan terms (years): Between 5 and 20 years
  • Loan amount: $5,000 to $300,000
  • Minimum credit score: Does not disclose
  • Who it might be good for: Anyone looking for flexible terms — this lender offers 16 different repayment plans, allowing you to choose your own repayment term between 5 and 20 years.

CommonBond

  • Rates: Fixed or variable
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amount: $5,000 to $500,000
  • Minimum credit score: 680
  • Who it might be good for: Borrowers planning on paying off their loan early. With CommonBond’s hybrid loan option, you’ll pay a fixed interest rate for the first half of the loan before switching to a variable rate. The format could help you save on interest charges, allowing you to pay off your loan early.

EdvestinU

  • Rates: Fixed or variable
  • Loan terms (years): 5, 10, 15, or 20
  • Loan amount: $7,500 to $200,000
  • Minimum credit score: 700
  • Who it might be good for: Borrowers who didn’t graduate

Education Loan Finance (ELFI)

  • Rates: Fixed or variable
  • Loan terms (years): 5, 7, 10, 12, 15, or 20
  • Loan amount: No maximum
  • Minimum credit score: 680
  • Who it might be good for: Borrowers with large loan amounts

INvestEd

  • Rates: Fixed or variableLoan terms (years): 5, 10, 15, or 20
  • Loan amount: $5,000 to $250,000
  • Minimum credit score: 670
  • Who it might be good for: Anyone who may need forbearance. INvestEd offers forbearance terms of up to three months (24 months maximum).

ISL Education Lending

  • Rates: Fixed
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amounts: Up to $300,000
  • Minimum credit score: 670
  • Who it might be good for: Borrowers who want to refinance while in school

Massachusetts Educational Financing Authority (MEFA)

  • Rates: Fixed or variable
  • Loan terms (years): 7, 10, or 15
  • Loan amount: $10,000 up to the total amount
  • Minimum credit score: 670
  • Who it might be good for: Students who attended public or nonprofit schools (attendees of for-profit schools are ineligible)

PenFed Credit Union

  • Rates: Fixed or variable
  • Loan terms (years): 5, 8, 12, or 15
  • Loan amount: $7,500 to $300,000
  • Minimum credit score: 670
  • Who it might be good for: Borrowers who want to transfer loan amounts to a spouse or parent, or from a parent to a child. This option provides flexibility for students-turned-professionals to transfer liability from their loved ones who provided financial help so they could obtain the dream of higher education.

Rhode Island Student Loan Authority (RISLA)

  • Rates: Fixed
  • Loan terms (years): 5, 10, or 15
  • Loan amount: $7,500 to $250,000
  • Minimum credit score: 680
  • Who it might be good for: Anyone under financial duress seeking income-based repayment options

SoFi

  • Rates: Fixed or variable
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amount: $5,000 up to the full balance
  • Minimum credit score: Does not disclose
  • Who it might be good for: Borrowers with advanced degrees

Other student loan refinance lenders to consider

Of course, there are other student loan refinance lenders worth considering. Keep in mind that these lenders are not offered through Credible, so you won’t be able to easily compare your rates with them on the Credible platform, like you can with partner lenders.

PNC Bank

  • Rates: Fixed, variable
  • Loan terms (years): 5, 10, or 15
  • Loan amount: Up to $$99,000 for undergraduates, up to $150,000 for graduate degrees
  • Minimum credit score: Does not disclose
  • Who it might be good for: Borrowers looking for flexible repayment options

Splash Financial

  • Rates: Fixed
  • Loan terms (years): Does not disclose
  • Loan amount: No maximum
  • Minimum credit score: Does not disclose
  • Who it might be good for: Borrowers looking to refinance a large amount

Wells Fargo

  • Rates: Fixed, variable
  • Loan terms (years): 5, 7, 10, 15, or 20
  • Loan amount: Does not disclose
  • Minimum credit score: Does not disclose
  • Who it might be good for: Borrowers looking to flexible repayment options

Methodology: How Credible evaluated lenders

Credible reviewed and validated data from various lenders and loans in 12 categories to identify the best student loan refinancing companies. Data points included interest rates, repayment terms, maximum loan balances, and customer service availability for 20 lenders. Also evaluated were each lending company’s eligibility requirements, cosigner release options, willingness to refinance parent loans, minimum credit score transparency, and whether they provided consumers with a soft credit check option.

Credible receives compensation from partner lenders when Credible users close a loan with them. It’s easy. You can use Credible to compare pre-qualified rates from these partner lenders without affecting your credit score.

How much can refinancing student loans save me?

When you refinance to a loan with lower interest rates, you may be able to lower your monthly payment while paying less in interest, which reduces the total cost over the life of the loan.

Of course, if you refinance to a new loan with a longer term, you could negate some of your savings on interest, and even end up paying more on a new loan. In the same way, student loan deferment doesn’t lower your loan costs.

Here’s an example of how refinancing could save you money in the short term but cost you more in the long run: You have four private loans totaling $40,000. Each loan charges you 3% interest over 10-year repayment terms.

Using Credible’s student loan calculator, you can see you’d make payments for the four loans that equal $405 each month. You’ll pay a total of $48,574 over the life of the loan, which includes $8,575 in interest payments.

But what if you wanted a lower payment and decided to refinance your loans into one private loan at 4.54% over 20 years? In this case, you’d undoubtedly achieve your goal of lower payments, with $254 due each month. However, with your loan spread out an extra 10 years, you’d be on the hook for $20,942 in interest charges, and you’d end up paying $60,941 in total on your student loan debt.

To maximize your interest savings, refinance into the shortest term you can afford. .

What are the pros and cons of student loan refinancing?

Before you apply to refinance your loans, consider these pros and cons to determine whether or not refinancing will benefit you.

Pros of student loan refinancing

  • Lower interest rate could lead to lower monthly payments and reduced overall costs
  • Streamline your loans into a loan with one monthly payment to one lender
  • Apply with a cosigner to access lower interest rates

Cons of student loan refinancing

  • Extend your timeline for student loan repayment
  • Lose federal repayment protections if you refinance federal loans into private loans
  • Credit score is a factor in your new interest rate

What credit score do I need to refinance student loans?

Credit score requirements vary among student loan lenders, and lenders don’t always disclose the scores you’ll need to qualify. Generally, people with higher credit scores qualify for better rates and terms than those with lower scores.

Looking at the 12 best student loan refinance companies above, most of the lenders who publicized their minimum credit score requirements look for a score in FICO’s “good” range of 670 or above. If your credit score is fair or poor, you may be able to qualify for a better loan by enlisting a cosigner with a good credit score.

You can learn more about student loan refinancing and minimum credit scores of student loan refinance companies by using Credible.

How does refinancing student loans affect credit?

Student loans typically affect your credit in the same ways as other types of debt. If you consistently make your payments on time, it’ll positively impact your credit score.But if you miss a payment, your score could drop significantly.

All of the lenders above perform a soft credit check, so comparing offers won’t hurt your credit. But once you choose an offer and formally apply for the loan, the lender may do a hard credit pull, which could cause a slight temporary hit to your credit score.

Fortunately, student loans aren’t factored into your credit utilization ratio, which measures how much of your revolving credit you’re using against the amount of credit available to you. That means having a large amount of student loan debt won’t affect your credit score.

Refinancing for a lower interest rate and monthly payment could lower your debt-to-income ratio. While a lower DTI won’t affect your credit, it can make it easier to qualify for a mortgage and other types of loans.


About the author: Tim Maxwell is a financial writer with over two decades of experience. Tim’s work has appeared in USA Today, Washington Post, Bankrate, LendingTree, Fox Business, Credible and more. He also publishes Incomist, a personal finance site that focuses on paying off debt by earning extra income in creative ways.

About the author
Tim Maxwell
Tim Maxwell

Tim Maxwell is a financial writer with over two decades of experience. Tim’s work has appeared in USA Today, Washington Post, Bankrate, LendingTree, Fox Business, Credible and more. He also publishes Incomist, a personal finance site that focuses on paying off debt by earning extra income in creative ways.

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