How To Refinance Student Loans

Refinancing your student loans can be a smart financial move, but it’s not right for everyone. When you refinance, a private lender issues you a new loan to pay off your existing student debt. Many borrowers choose to refinance to get a lower interest rate or monthly payment, or to consolidate federal and private loans into one. 

If you refinance federal loans, you’ll permanently lose access to income-driven repayment and access to loan forgiveness programs. Before you apply, check whether the savings are worth what you might give up. 

Here’s how to compare lenders, check your eligibility, and decide whether refinancing is right for you.

Compare student loan refinancing rates

First, decide what you want: a better interest rate, a lower monthly payment, or a more flexible lender. Setting your goals upfront helps you choose the right lender later.

If you only have private student loans, refinancing isn’t risky. But if you plan to refinance federal student loans, you’ll give up federal protections that private lenders generally don’t offer.

​To keep federal protections, consider a Direct Consolidation Loan. Federal consolidation won’t lower your interest rate, but it may reduce your monthly payment by extending your repayment term up to 30 years, depending on your loan balance. However, a longer term means paying more interest over time, and consolidation can affect progress toward PSLF or other forgiveness programs. Check with your loan servicer before moving forward.

How to refinance student loans

Refinancing involves comparing lender rates, selecting a loan offer, and applying for a new loan to replace your existing student debt.

Follow these steps to refinance your student loans:

Step 1. Research student loan lenders

Some refinancing lenders are better for certain situations than others. Since not all lenders provide the same benefits, it’s important to compare what each offers and which best fits your needs. 

Consider the following factors:

• Interest rates: While the interest rate you qualify for depends largely on your credit score, each lender calculates your rate differently. You typically want to look for a lender that offers the lowest rate, the lowest monthly payment, and the best terms.
• Fixed vs. variable rates: Many lenders offer fixed and variable interest rates. Fixed rates never change over the life of your loan, while variable rates can fluctuate based on economic conditions.
• Repayment terms: Your loan’s term is how long you have to repay your debt. If you want to pay off your student loans fast, consider a shorter loan term. However, if you need more room in your budget and want to lower your monthly payment, a longer loan term may be a better fit. Just keep in mind the longer the repayment term, the more interest you’ll pay.
• Monthly payments: If the estimated monthly payments don’t fit into your budget, look for a different term or interest rate to lower it.
• Fees: Prioritize lenders that offer low fees or allow you to refinance for free, such as no origination fees.
• Eligibility requirements: Criteria vary by lender, so look for the one that best fits your needs. For example, if you don’t have stellar credit, you might want to add a cosigner. Or maybe you didn’t graduate — in that case, you can prioritize lenders that don’t require a degree to refinance.

Step 2. Prequalify with multiple lenders

Many lenders — but not all — allow you to prequalify for student loan refinancing. Prequalifying allows you to see estimated, personalized rates and terms based on your credit profile. This can help you compare lender offers more accurately. To prequalify with a lender, you’ll have to provide personal information, such as income, employment, and loan balances. 

Step 3. Compare rates, terms, and borrower benefits

Some lenders offer perks such as rate discounts, referral bonuses, or hardship programs that pause payments. Others have cosigner options, including ways to release your cosigner later. Consider each lender's benefits as you review your choices.

Step 4. Choose the best refinance offer

Since not all lenders offer the same products or have the same qualifying criteria, the right lender depends on your financial situation. For instance:

• If you can afford a larger monthly payment, consider refinancing for a shorter repayment term. This can lead to the greatest savings because you’ll pay off your student loans faster. 
• If you want to lower your monthly payment, consider extending your loan term. You likely won’t qualify for the lowest interest rate, and your total repayment costs may increase. But your payment will be more affordable — you can always pay more than required anytime you can afford it.

Step 5. Submit your application

Once you’ve chosen a lender, submit the application. You’ll typically need to provide personal information, proof of income, and details about your current student loans.

When you submit a full application, the lender will conduct a hard credit check (which can impact your credit score), verify your documents, analyze your debt-to-income ratio, and more.

The lender then determines whether to approve your loan and what rate you’re eligible for. If you still like what you see, sign the final loan paperwork.

If you decide that refinancing is the right option, the next step is to find the best lender and complete the application process. While requirements vary by lender, refinancing typically involves comparing rates, selecting a loan offer, and applying for a new loan to replace your existing student debt.

Follow these steps to refinance your student loans:

Should you refinance your student loans?

First, decide what you want: a better interest rate, a lower monthly payment, or a more flexible lender. Setting your goals upfront helps you choose the right lender later.

If you only have private student loans, refinancing isn’t risky. But if you plan to refinance federal student loans, you’ll give up federal protections that private lenders generally don’t offer.

​To keep federal protections, consider a Direct Consolidation Loan. Federal consolidation won’t lower your interest rate, but it may reduce your monthly payment by extending your repayment term up to 30 years, depending on your loan balance. However, a longer term means paying more interest over time, and consolidation can affect progress toward PSLF or other forgiveness programs. Check with your loan servicer before moving forward.

How much you could save with student loan refinancing

One of the biggest reasons borrowers refinance their student loans is to save money. Even a small reduction in the interest rate can lead to significant savings over the life of your loan.

For example, say you have a $50,000 student loan balance, a $620 monthly payment, a 10-year repayment term, and an 8.5% interest rate. If you qualify for a new 10-year refinance loan with a 6.5% interest rate, your monthly payment and total interest costs could decrease significantly. Using Credible’s student loan refinance calculator, refinancing this loan would lower the monthly payment by about $52 and reduce your total interest costs by more than $6,200.

How much you save depends on your credit score, income, debt-to-income ratio, loan balance, and the repayment term you pick. Borrowers with good credit and steady income usually qualify for the best refinance rates.

Here’s how adding a cosigner to your application can help you get lower rates:

How much you could save with student loan refinancing

One of the biggest reasons borrowers refinance their student loans is to save money. Even a small rate reduction can lead to significant savings over the life of your loan.

For example, say you have a $50,000 student loan balance, a $620 monthly payment, a 10-year repayment term, and an 8.5% interest rate. If you qualify for a new 10-year refinance loan with a 6.5% interest rate, your monthly payment and total interest costs could decrease significantly. Using Credible’s student loan refinance calculator, refinancing this loan would lower the monthly payment by about $52 and reduce your total interest costs by more than $6,200.

How much you save depends on your credit score, income, debt-to-income ratio, loan balance, and the repayment term you pick. Borrowers with good credit and steady income usually qualify for the best refinance rates.

Student loan refinancing vs. student loan consolidation

Refinancing and consolidation combine your loans into a single payment, but they work differently. Refinancing involves a private lender and a credit check, and may lower your interest rate. Consolidation only applies to federal loans and doesn’t require a credit check. You’ll keep your federal protections, but it won’t reduce your rate.

Federal loans taken out before July 2026 can stay on income-driven repayment plans, such as Income-Based Repayment (IBR), or switch to the new Repayment Assistance Plan (RAP). However, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans are being phased out, so borrowers on those plans will need to switch to another plan.

Federal loans taken out on or after July 1, 2026, can qualify for RAP under income-driven repayment only, including consolidation loans.