10 Essential Things to Ask Before Refinancing Your Student Loans

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Refinancing with Earnest

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Refinancing your student loans can be a smart strategy. You can secure a lower student loan rate, reduce monthly payments, or otherwise renegotiate the terms of your debt.

But like most money moves, refinancing needs to be carefully thought out to ensure it’s the best option. While it might benefit some borrowers, it won’t make sense for everyone.

So if the question “Should I refinance my student loans?” is on your mind, here are 10 other questions you should ask yourself first to make the best decision.

1. What is my main goal for refinancing student loans?

The first thing you need to think about is what outcome you’re hoping for by refinancing student loans.

There are some great reasons to refinance student loans: You can lock in lower interest rates, reduce monthly payments, or get rid of debt faster.

It’s important to get clear on which benefits are most important to you. Your central student loan refinancing goal will guide your decision and help you choose the loan that will best meet your needs.

This student loan refinance calculator can help you compare refinance terms and see which gets you closest to what you want.

2. What interest rates can I get?

If you want to get a lower interest rate, you need to figure out what your rates are. Over the past 10 years, interest rates on federal student loans have ranged from 3.40% to 8.50%, depending on the type of loan and the rates offered at the time of origination. Private student loan rates have an even wider range, from about 4% to about 15%.

When you refinance your loans, you replace existing student loans with a new one. This gives you a chance to shop for a lower interest rate and get a better deal.

The higher your current interest rate, the more you’ll probably benefit from refinancing to a lower rate. You’ll also need to have good credit and to meet the underwriting criteria of the best lenders that refinance student loans.

A lower student loan rate can save you money since it reduces both your monthly payments and the amount of interest you’re assessed over the life of the loan.

3. What are my student loan payoff amounts?

When researching the interest rates on your loans, also note your loan payoff amount — the payment you’d need to make to pay off your student loans in full. It will be higher than the balance displayed on your loans because it includes any interest you still owe.

The total payoff amount for all the student loans you hope to combine through refinancing will be the balance of your new loan.

Refinancing student loans can change your loan terms and monthly costs. If you’re considering refinancing student loans, you’ll want to make sure your new payments will be manageable.

Wondering if refinancing is a good idea for you? Answer a few questions below and we’ll help you find the right solution! Otherwise, scroll down to read on.

4. How much can I afford to pay each month?

Once you have your payoff amounts, you can use our student loan payment calculator to see what your monthly costs could look like.

Depending on your needs, you’ll want to decide on the right student loan repayment period:

  • A longer student loan term will result in lower monthly payments, which could be important if you have a low income, high living costs, a high student loan payoff amount, or a combination of these.
  • A shorter repayment term will help you get out of debt faster and often comes with a lower student loan rate, helping you get out of debt while paying less.

Of course, borrowers’ abilities to repay will also depend on their unique circumstances.

The payments you’ve already been making can give you a baseline of what’s affordable for you. If you’re already making extra payments, that’s a good sign you could afford to switch to a shorter repayment period to save even more.

But if it’s been a struggle to make payments, consider refinancing under terms that will lower the payments and give you more room in your budget.

5. Will I need federal student loan repayment options in the future?

Are you struggling with payments, do you have an unstable income, or is your financial situation otherwise uncertain? These could be signs that refinancing isn’t right for you, at least not if you have federal loans.

That’s because refinancing with a private lender pays off federal student loans and replaces them with a new private student loan. This action is irreversible and will mean losing access to several important protections granted to federal student loan borrowers.

If you’re looking to refinance federal student loans, you should know what you’re giving up. Federal student loans offer many protections that won’t be available if you refinance:

  • Alternative repayment plans, including affordable income-driven repayment options
  • Federal student loan forgiveness programs
  • Deferment or forbearance under federal rules

You should be confident that you can keep up on payments both now and in the future before giving up these protections.

6. Do I have good enough credit to refinance my student loans?

Your credit history will be a core factor that lenders will consider when deciding whether to approve or deny your student loan refinance application. Reviewing your own credit can help you see if you have a good credit score to refinance student loans.

It’ll be easier to qualify for a refinance and get favorable terms if you have good credit. A good-to-excellent credit score is required by most lenders, with minimum score requirements typically set at 650 to 680. Most lenders also tie refinancing rates to credit scores, with the lowest rates extended to borrowers with excellent credit (in the mid-700s and above).

If you know your credit score, you can see the interest rates and terms for which you might qualify. You can view your credit score on sites such as Mint, CreditWise, or Credit Sesame.

Many refinancing lenders will also provide a free soft credit check. This option will generate a student loan refinance rate offer without triggering a hard inquiry on your credit report, which could lower your score by a small margin.

7. Do I meet lenders’ income requirements?

Generally, lenders will want to see that you have a steady income, which will allow you to afford monthly payments and repay your student loans.

Most lenders have income requirements but don’t publish them. As a general rule, an annual income in the range of the national median household income of $61,372 (per the U.S. Census Bureau) will give you a decent chance of qualifying for refinancing, with higher incomes viewed even more favorably.

But income isn’t the only factor that lenders look at to decide if you can afford your student loans. Many will be interested not only in how much you make, but also in how much you owe relative to your pay. This is measured with a debt-to-income (DTI) ratio that finds what percentage of your monthly income goes toward minimum payments on existing debt.

The lower your DTI, the better — a 43% DTI is typically the highest you can go to be considered for new credit, but most lenders prefer a DTI of about 30% or lower.

Use our DTI calculator to find out whether this factor will work in your favor or against you when applying to refinance student loans.

8. Do I need a cosigner? Is cosigner release an option?

If you’re rejected for student loan refinancing, or think that your income or credit score is too low to qualify, don’t give up.

Many lenders will allow you to refinance student loans with a cosigner who meets their lending requirements. Adding a cosigner can also help you snag a better student loan refinance rate than what you’d be offered on your own.

Alternatively, you might want to refinance a student loan to release a cosigner from your original student loan, replacing it with a new loan that doesn’t include the person. Perhaps your parents cosigned a student loan with you when you first entered college, for instance. If you now have a reliable job and a good financial history, it might be a good idea to remove them as a cosigner. Refinancing can allow you to do that.

9. Does the refinance lender offer flexible repayment options?

Even if you are confident in your ability to repay your student loans, there are no guarantees in life. It could still be wise to consider refinancing with lenders that offer borrower protections, such as deferment and forbearance.

While refinancing student loans means you’ll lose access to federal repayment plans, your lender might still provide flexible payment options.

Check to see if they have policies that allow you to adjust your payments if you’ve hit a rough financial patch. You should also ask about their policies and willingness to work with borrowers who are struggling to repay.

SoFi, for example, provides unemployment protection on its student loans, allowing borrowers to pause payments in the case of a job loss.

Many private lenders, such as Laurel Road, will also agree to honor your grace period — which, for federal loans, covers the first six months after you leave school. So even if you refinance right after graduating, you’ll still have some payment-free time to get on your feet.

10. What type of support and customer service does the lender provide?

It’s important to get the initial terms and rates right on your student loan refinance. But you should also consider the kind of experience each lender offers.

As student loan borrowers ourselves, we have dealt with loan servicers or lenders that provide poor customer service. A lender like that will add to your student loan stress and make managing this debt a miserable experience.

But a lender with solid customer service can help you manage your student debt more effectively and quickly resolve any issues that might arise.

You’ll be working with your new bank or lender for the next five to 20 years. Be sure to do your research and shop around before refinancing your student loans to ensure that you save money and have no regrets.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.

Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:
    Fixed rates from 3.899% APR to 7.979% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% 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 2.470% APR assumes current 1 month LIBOR rate of 2.30% plus 0.91% 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. 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.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.

All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. 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 November 1, 2018, the one-month LIBOR rate is 2.29%. Variable interest rates range from 2.79%-8.39% (2.79%-8.39% 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 cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, 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.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.

2.47% – 6.99%3Undergrad
& Graduate

Visit SoFi

2.57% – 6.97%1Undergrad
& Graduate

Visit Earnest

2.57% – 8.09%4Undergrad
& Graduate

Visit Lendkey

3.02% – 6.44%2Undergrad
& Graduate

Visit Laurel Road

2.50% – 7.24%5Undergrad
& Graduate

Visit CommonBond

2.79% – 8.39%6Undergrad
& Graduate

Visit Citizens

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.