Student Loan Refinance Guide

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Refinancing your student loans is a great way to save on interest costs or lower your monthly payments when you need a little help. By understanding how the process works and who the key providers are, you can set yourself up for success in paying off the remainder of your education costs. The best student loan refinance companies offer great APR rates, flexible repayment terms, great customer service and additional tools and resources to help you succeed.

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The 4 best student loan refinance providers of 2020

Lender Fixed Rates Terms Loan Amount Key Benefit
SoFi 2.99% – 6.24% (with AutoPay) 5 – 20 years Up to full balance Comes with free financial coaching
Splash Financial Starting at 1.58% Not listed Up to full balance Rate check in 3 minutes
Earnest Starting at 3.75% Not listed Minimum $5,000 Ability to adjust payment date
Credible Starting at 1.58% 5 – 20 years Varies Get multiple offers at once

The 4 best student loan refinance providers of 2020

Sofi – Best overall

Student loan refinancing through Sofi is available up to the full balance of your loan with repayment periods of five to 20 years. Compared to several comparable options, rates are a bit more expensive for both variable- and fixed-rate refinancing. SoFi does allow for refinancing private loans, Parent PLUS loans and federal loans. The company also offers career coaching and financial advice to all customers free of charge.

If you decide to go back to graduate school while repaying your SoFi loan, the company will allow you to defer your loan until you complete your schooling. This service also extends to active-duty military and people undergoing disability rehabilitation. Overall, SoFi is a well-rounded option for student loan refinancing.

Fixed rates from 2.99% APR to 6.24% APR (with AutoPay). Variable rates from 1.99% APR to 6.24% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 1.99% APR assumes current 1 month LIBOR rate of 0.18% plus 3.06% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

Splash Financial – Best for medical school debt

Students with medical school debt that are looking to refinance should consider using Splash Financial. Rates on medical school refinancing start at 2.80% APR variable and 3.76% fixed. During your time in residency and fellowship, you can refinance and pay as little as $100 month. These amended payments can continue up to six months after your training completes.

Rates on Splash Financial refinancing for traditional student loans start as low as 1.83% APR variable and 3.13% APR fixed before a 0.25% autopay discount. Compared to other lenders, these rates are industry-leading. Couple this with 95% customer satisfaction, cutting-edge application technology and helpful customer service, and you can see why Splash Financial is one of the best student loan refinancing companies available.

Earnest – Best mobile app

Earnest offers student loan refinancing with fixed rates starting at 3.75% APR and variable rates starting at 3.50% APR with auto pay, which is on-par with the current rates available at comparable lenders. A refinanced loan through Earnest comes with several great features, including in-house servicing, customized loan terms, the ability to skip one payment every year and biweekly auto payments.

Additionally, if you’re looking to consolidate several student loans, Earnest can help, as the company offers refinancing and debt consolidation options. Interested applicants will need at least a 650 credit score, current employment and be up to date on their loan accounts and rent or mortgage payments.

Credible – Best marketplace lender

If you’d like to get multiple offers and rates from different lenders at the same time, you may want to consider using a marketplace lender like Credible. Within two minutes, you can see offers from several of the top student loan refinancing lenders across the country. All loans come with no service fee, no origination fee and no prepayment penalties.

Credible offers refinancing for private loans, federal loans and parent PLUS loans. Current rates start as low as 1.58% with repayment terms between 5 and 20 years. Lenders looking to streamline the comparison process will enjoy using the online marketplace provided through Credible.

What is student loan refinancing?

Student loan refinancing is the practice of exchanging an existing loan for a new loan with either lower monthly payments or a lower annual percentage rate (APR). When you refinance, a new lender either gives you funds to pay off your existing loan or directly pays your current lender the full amount. As your initial student loan is paid off, that loan is closed. From then on, you make payments to the new lender for the money you borrowed to pay off the first loan. Generally, people refinance their student loans when interest rates drop, their credit score goes up or they need to lower their monthly loan payments.

Student loan refinancing vs. consolidation

The main difference between refinancing and consolidation is the number of loans you are looking to get new terms for. When you refinance, you take out a new loan to replace the single loan you are refinancing. When you consolidate, you take one a new loan that pays off and replaces two or more loans. Consolidation carries the same benefits and functionality of refinancing with the addition of the convenience of not having to make multiple loan payments to different lenders every month.

Refinance Consolidadtion
  • Refinance to get a lower rate
  • Applies to one single loan
  • Consolidate to pay one aggregate rate
  • Applies to two or more loans

What to look for when you refinance your student loans

  • APR rates, not interest rates. Make sure you’re looking for the student loan refinancers that offer the lowest APR rates and not interest rates. APR rates take into account any fees or additional costs you may have to pay and adds them to your interest costs.
  • Flexible repayment terms. When deciding how you want to repay your loan, look for flexibility in how long you get to repay. This becomes especially important if you’re looking to lower your monthly payments.
  • Plans for help if you need it. Some lenders offer incentives that can help you down the road if you have trouble paying. These include things like deferment, the ability to skip a payment and the ability to change your payment due date.

How to refinance your student loans

1. Request your 10-day payoff amount from your current lender.

Contact your existing lender and request your 10-day payoff amount. This is the amount your new lender will need to pay to close out your existing loan. Generally, you can request this automatically from your existing lender’s website.

2. Shop online lenders offering student loan refinancing.

Begin comparing the top student loan refinancing companies. Determine what key factors are important to you, and find the best fit.

3. Complete the preapproval process.

Once you’ve located a few potential options, go through the preapproval process. Make sure the lender you want to work with is willing to work with you.

4. Select a lender, and move forward with the full application process.

After you’ve completed the pre-approval process, make a selection on the lender you want to use. Complete the full application process and wait for approval. Time frames for approval will vary greatly depending on the lender you choose.

5. Once approved, immediately pay off your existing loan.

Most student loan refinancing companies will pay off your existing lender automatically. Some, however, will send the money to you and ask you to pay off your existing loan. If that is the case, take the money and pay off the loan immediately. Failure to do so could get you into a tough financial situation.

Private student loan refinancing

Whether you’re looking to lower your payments or save on interest, private student loan refinancing often can help. Different lenders may be willing to offer you better rates or lower payments depending on your loan details, market rates and your creditworthiness. If you’re struggling to keep up with payments, start by reaching out to your current loan provider for help. If the company is unable to assist, refinancing to a longer-term might be an option. You will generally pay more over the life of the loan on interest, but your payments will come down.

Federal student loan refinancing

Refinancing your federal student loans is possible through private lenders, but may or may not be the right fit for you. If you’re having issues paying, altering your repayment plan could be the better option and can be done as many times as needed. If your goal is to save on interest payments, refinancing through a private lender could help you to save significantly. Do be aware, though, that you will lose the protections and repayment options that are unique to federal student loans.

Can you refinance student loans more than once?

Yes, you can refinance your student loans as many times as you want. Should you? Well, the reasons you might want to refinance your student loans a second time are the same reasons you refinanced in the first place. If interest rates change, your creditworthiness improves or you need to adjust the size of your payments, take advantage of the savings or more-fitting repayment terms.

The bottom line

Refinancing your student loans can help you to save on interest costs or keep up with on-time payments. The key to making the right refinancing move is understanding your options and knowing which providers offer the right solution for your loan. You’re never required to refinance, but you may be able to reap some helpful benefits by doing so through the right lender.

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Student Loan Consolidation Guide

Jason Lee
Jason Lee
Contributing Writer

Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here