In the United States, student loans are a national epidemic. According to Experian, Americans carry $35,620 in student loan debt, on average. If your loans have a high interest rate, your loan balance can quickly balloon out of control.
Student loan refinancing can be a smart strategy to manage your debt. By working with a private lender to take out a loan for your existing debt, you can lower your interest rate, reduce your monthly payment, or even pay off your loans early.
Best Student Loan Refinance Companies
- Credible: Best Refinancing Marketplace
- RISLA: Best Overall
- Splash Financial: Best Interest Rate
- SoFi: Best Benefits
- Discover: Best for No Fees
- CommonBond: Best Repayment Options
- Citizens Bank: Best for Borrowers Who Didn't Graduate
- PenFed Credit Union: Best for Spousal Loans
- Laurel Road: Best Parent Loan Refinancing
Best Refinancing Marketplace: Credible
Before refinancing your student loans, it's wise to get rate quotes from several different lenders to ensure you get the best terms. While you can do that manually on your own, there's a simpler way: you can go through a refinancing marketplace.
With Credible, you submit your information just once and get quotes from multiple lenders, without affecting your credit score. You can compare interest rates and loan terms from up to ten top lenders and choose the best one for your needs. Once you choose a loan, you can complete your application online.
You can use Credible to get quotes to refinance federal loan, private loans, and even Parent PLUS Loans.
Credible offers a best rate guarantee. If, after receiving prequalified options for student loan refinancing, you receive an offer for a better rate from a lender not on the Credible website and refinance with that lender at a lower rate, you'll get a $200 Best Rate Reward.
The service is completely free to use. Instead of charging users fees, Credible makes money through referral commissions if you for a loan through its website.
Learn more in our Credible review.
Best Overall: RISLA
The Rhode Island Student Loan Authority (RISLA) stands out from other student loan refinancing lenders because of its competitive rates and the substantial benefits it offers to borrowers.
Despite RISLA's name, borrowers can refinance student loans used to attend colleges nationwide. You can refinance between $7,500 and $250,000. All refinancing loans have fixed interest rates, and, as of July 31, 2020, the lender offers the following interest rates:
- Fixed rates: 3.49 to 7.69% (including 0.25% autopay discount)
RISLA's student loan refinancing program has a wide range of benefits that go beyond what you typically expect from private lenders. Its protections include:
- Income-based repayment: If you can't afford your payments, you may qualify for RISLA's income-based repayment (IBR) plan. With this option, RISLA will base your monthly payment on your income and family size, potentially reducing your payments.
- Total and permanent disability: Private lenders typically don't offer loan discharges in the case of disability; RISLA is an exception. If you are unable to work because of a physical or mental impairment, you may qualify for total and permanent disability discharge. If eligible, your loan balance will be forgiven upon submission of medical documentation.
- Graduate school deferment: If you decide to attend graduate school, you can defer your loan payments for up to 36 months.
- Forbearance: If you are unemployed or have another emergency, you may be eligible for forbearance. If you qualify, you can postpone your payments for up to three months at a time, for up to 12 months over the life of your loan.
Learn more in our full RISLA review.
Best Interest Rate: Splash Financial
Out of all the lenders we reviewed, Splash Financial has the lowest interest rates for student loan refinancing. As of July 31, 2020, the lender offers the following rates (lowest rate includes 0.25% autopay discount):
- Variable: 1.99% to 7.10%
- Fixed: 2.88% to 7.27%
You can choose a loan term of five, eight, 10, 12, 15, or 20 years in length. You must have at least $5,000 in student loan debt to refinance with Splash Financial, and there is no loan maximum. The lender does not charge any application, origination fees, or prepayment penalties.
Best Benefits: SoFi
If you want a refinancing lender that offers comprehensive benefits, consider SoFi. The company provides robust perks to refinancing borrowers, including:
- Unemployment Protection: If you're laid off from your job, you can postpone making payments for three months at a time, for a maximum of 12 months.
- Career Coaching: Get access to a career coach to get advice on asking for a raise, preparing for a promotion, or building your personal brand.
- Referrals: Refer a friend to SoFi's loan program. If they apply for a loan and are approved, you'll get $300.
- Financial Advice: Make an appointment with a financial advisor to get free personalized guidance on investing, saving for retirement, and budgeting.
With SoFi, you can refinance as little as $5,000, and there is no maximum loan amount. To be eligible for a loan, you need to have graduated with at least an associate's degree. SoFi does not publicly list its minimum income or credit requirements.
There are no application or origination fees, and the following interest rates apply as of July 31, 2020 (autopay discount included):
- Variable: 2.99% to 6.69%
- Fixed: 3.20% to 6.69%
Learn more about what rates may be available to you with SoFi and compare offers from multiple lenders at Credible, or learn more about SoFi student loans in our full review.
Best for No Fees: Discover Student Loans
While some lenders charge origination, application, or late fees, Discover is different. It charges no fees at all, even if you miss a payment. With no added fees, the only charge you have to worry about is the interest that accrues on your loan.
With Discover, you may qualify for a loan without a cosigner. As of July 31, 2020, the following interest rates apply (rates include autopay discount):
- Variable: 2.37% to 6.12%
- Fixed: 3.99% to 7.74%
You can refinance $5,000 to $150,000, and you can choose to refinance your loans while you're still in school. To qualify for a loan, you must be at least 18 years old, pass a credit check, and have verifiable income.
Learn more about Discover student loans in our full review.
Best Repayment Options: CommonBond
If you're looking for a lender that offers flexible repayment options, CommonBond is hard to beat. Two features make CommonBond stand out from other lenders:
- Hybrid Loans: With a hybrid loan, the first five years of the loan have a fixed interest rate. After that, the loan will have a variable-interest rate. This approach is a good idea if you want to take advantage of a low interest rate and pay off your loans as quickly as possible, but also want the security of a fixed-rate loan.
- Forbearance: If you're dealing with financial difficulties after losing your job or receiving a medical diagnosis, you can postpone making payments on your loans for up to 24 months over the length of your loan—the longest forbearance option offered by any lender. Being able to skip payments without entering into default can give you time to get back on your feet.
As of July 31, 2020, CommonBond offers the following rates (rates include a 0.25% autopay discount):
- Variable: 3.19% to 6.07%
- Fixed: 3.19% to 5.99%
- Hybrid: 4.05% to 5.76%
Learn more about CommonBond student loans in our full review.
Best for Student Who Didn't Graduate: Citizens Bank
If you didn't graduate from school, you'd struggle to find a lender willing to work with you. Citizens Bank is the one of the few national lenders that allows borrowers to refinance without a degree.
As of July 31, 2020, Citizens Bank offers the following interest rates (rates include 0.25% autopay discount and 0.25% loyalty discount):
- Variable: 2.49% to 8.38%
- Fixed: 3.20% to 8.63%
Citizens Bank offers borrowers some useful perks:
- Loyalty Discounts: If you have another account with Citizens Bank, such as a checking or savings account, you can qualify for a 0.25% reduction on your interest rate.
- Automatic Payment Discounts: Sign up for automatic payments and get another 0.25% off your interest rate.
- Cosigner Release: After making 36 consecutive, on-time payments, you may qualify to have your cosigner removed from your loan.
To qualify for a student loan from Citizens Bank, you must not be currently in school, and your loans must be in repayment. If you didn't graduate, you need to make 12 on-time, consecutive payments on your loans before you can apply for refinancing.
Learn more about Citizens Bank student loans in our full review.
Best for Spousal Loans: PenFed Credit Union
If you and your spouse both have student loans, you may want to combine your debt together. It will streamline your payments, so you have just one monthly payment and one loan servicer to remember.
While most lenders will allow you to cosign your spouse's refinancing application, the only lender that actually offers spousal loan refinancing—where the loans are consolidated together—is the PenFed Credit Union.
To determine your eligibility and to set your interest rates, PenFed will look at your combined income. If one person is a stay-at-home parent, this approach can be beneficial and help you get a lower interest rate than you'd receive on your own.
With PenFed, you can refinance between $7,500 and $300,000 of student loan debt. Loan terms range from five to 15 years, and there are variable and fixed interest rates. As of July 31, 2020, the following rates apply:
- Fixed: 3.23% to 5.53%
- Variable: 2.59% to 4.99%
Laurel Road: Best Parent Loan Refinancing
If you took out student loans to pay for your child's education, you might be stuck with a high interest rate. Federal Parent PLUS Loans have the highest interest rate of any federal loan. If you have these types of loans, refinancing can be a smart decision.
Laurel Road is one of the few lenders that offers refinancing for Parent PLUS Loans and allows you to transfer your loans into your child's name. By refinancing your debt into your child's name, you eliminate your obligation to repay the loan, and your child is responsible for repaying it instead.
Laurel Road offers variable and fixed-rate loans for parent loan refinancing. As of July 31, 2020, the following rates apply on parent refinancing loans, including a 0.25% autopay discount:
- Variable: 1.99% to 6.65%
- Fixed: 3.20% to 7.02%
Should You Refinance Your Student Loans?
To decide whether or not to refinance your student loans, look at your current interest rates. If you have high-interest student loans, you could pay thousands in interest charges over the length of your loan. If you have good credit and stable income, you could refinance your debt and qualify for a lower interest rate, helping you save money.
How Do You Refinance Student Loans?
To refinance your student loans, apply for a loan from a private lender for the amount of your existing debt. Once approved, you can use the loan to pay off your old loans. You can refinance both federal and private student loans, consolidating them together. After that, you'll have just one loan to manage, with only one monthly payment to remember.
What Credit Score Do You Need to Refinance Your Student Loans?
Not all lenders publicly list their minimum credit score requirements. Of the lenders that we looked at, Earnest has the lowest requirement. To qualify for a loan from Earnest, you'll need a credit score of at least 650.
If your credit score is lower than that, you may still be able to qualify for a loan if you have a cosigner on your application.
What Is the Difference Between Student Loan Consolidation and Student Loan Refinancing?
Student loan consolidation and student loan refinancing may sound similar, but they're actually very different terms.
Student loan consolidation refers to federal Direct Consolidation Loans. With a Direct Consolidation Loan, you can combine your eligible federal student loans together. Repayment terms can be as long as 30 years, and your interest rate is based on the weighted average of your current interest rates.
With student loan refinancing, you work with a private lender to take out a loan for the existing debt you have. When you refinance, you'll lose federal loan benefits. However, you can qualify for a lower interest rate and save money over time.
Can You Refinance Federal Student Loans?
While you can refinance federal student loans—and even combine them with your private student loans—there are some drawbacks to consider.
When you refinance your federal education debt, you'll lose out on federal benefits and protections. For example, you'll no longer be eligible for income-driven repayment plans, Public Service Loan Forgiveness, or federal forbearance or deferment programs.
Refinancing may be worth it if your goal is to save money, but think carefully about the downsides before submitting your loan application.
Is It Worth It to Refinance Student Loans?
In many cases, student loan refinancing is an effective strategy for managing your debt. Many student loan refinancing lenders don't charge any origination or application fees. If you have good credit, you can qualify for a loan with a lower interest rate without paying any added fees. Over time, you can save thousands of dollars and pay off your loans years ahead of schedule.
Refinancing Your Student Loans
Refinancing your student loans can be a great way to save money and accelerate your debt repayment. There's no one perfect lender for everyone, so shop around and get rate quotes from multiple lenders so you can find the best deal.
Research for this article encompassed private student loan lenders of undergraduate private student loans (as well as companies that refinance student loans) narrowed down from national banks, credit unions, and lenders. The criteria for measuring each lender included all available APR ranges for these loans, fees charged, repayment plans and hardship options offered, and the inclusion of additional features and benefits.
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