6 Best Reasons to Refinance Your Student Loans in 2019

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Refinancing with CommonBond

Refinancing rates from 2.14% APR. Checking your rates won’t affect your credit score.

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Do you feel overwhelmed by your student loan payments?

It can be time-consuming and tedious to keep track of all of them. And are you really sure you have the best interest rate you can get? Or maybe the rate is reasonable, but the monthly payments feel like more than you can afford.

That’s where student loan refinancing comes in. Refinancing can be a great way to snag a better interest rate and eliminate a bunch of headaches in the process. You can also lower how much you pay each month — or even raise the amount if you’re looking to pay off your debt more quickly.

Here are some of the best reasons to refinance your student loans.

1. Lock in a lower interest rate

When you refinance your student loans, you combine all your federal and private loans into one new loan with a private lender. This private lender could be a bank, credit union or an online institution like SoFi or CommonBond.

Before giving you an offer, the lender reviews your income and credit score. If you have a steady job and strong credit, you could qualify for excellent interest rates, since these factors show that you’re not a risky candidate for a loan.

Most lenders look for a credit score of 650 or higher. If your score falls below that mark, applying with a cosigner could net you a better interest rate. Adding a cosigner to your application can be another way to reduce risk in the eyes of the lender.

The lender will offer you a variety of loan terms with both fixed and variable interest rates. Currently, variable rates tend to be lower than fixed rates at the beginning, but they could go up (or down) over time. Whatever you choose, lowering your interest rate could save you lots of money over the life of your loan.

Let’s say you have $50,000 in student loan debt with an average interest rate of 6.80%. Through refinancing, you lock in a new fixed interest rate of just 4.99%. After 10 years of repayment, you would save over $5,438 on interest.

You can game out different interest rates for your own situation with our student loan refinancing calculator.

2. Reduce your monthly payments

Refinancing your student loans may mean a lower interest rate, but it can also change your repayment terms if you qualify.

Most federal and private loans come with a 10-year repayment term. Although student loan refinancing options vary by bank, most range from five to 20 years.

If your current loan has a 10-year repayment term and you refinance to a 20-year term, your monthly payments will of course drop significantly. This can help add room in your monthly budget if you need it.

Let’s reconsider that example of $50,000 in debt at a 4.99% interest rate. On a 10-year term, you’d pay $530 per month. But if you lengthen your repayment term to 20 years, you’d pay just $330 every month. That $200 in monthly savings could be just what you need to make rent or buy groceries.

The federal government also offers some income-driven repayment plans, such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR), but they only apply to federal student loans — and you also might not even qualify if you don’t meet the income requirement.

Student loan refinancing helps grads who don’t qualify for income-based repayment but also don’t make enough money yet to manage their student loan payments comfortably.

Keep in mind, though, that a longer payment term can mean more interest paid over time — so pay attention to the total cost of the loan and consider paying it off early when your finances improve. Often, there’s no penalty for prepaying your loans before the term is up, but always check with your lender to be sure.

3. Take advantage of a flexible repayment plan

Banks and other private lenders aren’t usually known for their flexibility, but some do offer helpful repayment options if you go back to school or run into financial hardship.

SoFi, for instance, lets you defer your monthly payments if you return to school on at least a half-time basis. CommonBond offers temporary forbearance in the case of economic hardship.

Some private lenders (SoFi and Laurel Road, among them) also honor an existing six-month grace period if your current loan has one. So if you refinance right after graduation, you may not have to start paying until your grace period is up.

That said, refinancing your student loans with a private lender means you lose access to federal repayment plans. Some of these plans include IBR, Income-Contingent Repayment (ICR) and Revised Pay As You Earn (REPAYE).

Plus, you won’t have access to federal loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF). So before refinancing, make sure you won’t need these federal programs.

4. Release a cosigner from your student loan

Sometimes if your parents are cosigners on your current student loans, it can add stress to your relationship with them. What’s more, your loan impacts your cosigner’s credit and their ability to borrow additional funds.

When you refinance with a private lender, you could be eligible to release your cosigner. Some lenders remove your cosigner from the loan after you make on-time payments for a certain number of months. Two banks that currently offer cosigner release are LendKey and Citizens Bank.

Once released, your cosigner can improve their credit score. As a result, they’ll gain access to new lines of financial capital if they need to buy a big-ticket item like a home or car.

If you’re looking to release a parent or other cosigner from your student loans, find out which lenders will work with you. If you have good credit and a steady income, it will be a lot easier to release your cosigner.

Similarly, refinancing could allow your mom and dad to transition a federal parent PLUS loan into your name.

5. Switch to a lender offering better service

Some borrowers find themselves unhappy with their student loan lender or servicer — student loan refinancing gives you the opportunity to switch to a new one with better customer service, if that’s an issue.

There are tons of online reviews to help you decide who to go with. As lenders compete for your business, put them under the microscope using resources like the Better Business Bureau and TrustPilot

Many new lenders in the refinancing space offer extensive online and phone-based customer service. Plus, they help you throughout the application process.

6. Consolidate student loans for easier management

If you borrowed money to pay for college, it’s likely you have more than one student loan you need to repay. On top of that, student loan servicers buy and sell loans. That means you could end up sending your payments to new places every few years. This becomes confusing and hard to manage after a while.

Student loan refinancing allows you to combine multiple student loans into one, making your debt easier to organize, track and repay.

Rather than riding herd over multiple payments and interest rates each month, you only have to worry about making one payment — with one potentially lower interest rate.

A direct consolidation loan through the federal government would also combine your debt, although it would leave you with about the same interest rates. Refinancing solves both problems.

If you’re tired of dealing with multiple student loans with various terms, research your student loan refinancing options. You could save money, time and a whole lot of hassle.

Still wondering if refinancing is a good idea for you? Answer a few questions below, and we’ll help you find the right solution.

Interested in refinancing student loans?

Here are the top 7 lenders of 2019!
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 3.45% APR (with Auto Pay) to 7.49% APR (with Auto Pay). Variable rate loan rates range from 2.14% APR (with Auto Pay) to 6.79% 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 September 6, 2019, 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 09/06/2019. 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 our student 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 SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.49% APR to 7.94% APR (with AutoPay). Variable rates from 2.14% APR to 7.84% 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 2.14% APR assumes current 1 month LIBOR rate of 2.14% minus 0.15% 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.  
  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)

3 Important Disclosures for Laurel Road.

Laurel Road Disclosures

FIXED APR
Fixed rate options consist of a range from 3.50% per year to 5.55% per year for a 5-year term, 4.00% per year to 6.00% per year for a 7-year term, 4.30% per year to 6.40% per year for a 10-year term, 4.60% per year to 6.80% per year for a 15-year term, or 5.05% per year to 7.02% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The monthly payment for a sample $10,000 loan at a range of 3.50% per year to 5.55% per year for a 5-year term would be from $184.00 to $193.00. The monthly payment for a sample $10,000 loan at a range of 4.00% per year to 6.00% per year for a 7-year term would be from $138 to $148. The monthly payment for a sample $10,000 loan at a range of 4.30% per year to 6.40% per year for a 10-year term would be from $104 to $115. The monthly payment for a sample $10,000 loan at a range of 4.60% per year to 6.80% per year for a 15-year term would be from $79 to $91. The monthly payment for a sample $10,000 loan at a range of 5.05% per year to 7.02% per year for a 20-year term would be from $68 to $80.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.

VARIABLE APR
Variable rate options consist of a range from 2.43% per year to 6.05% per year for a 5-year term, 3.75% per year to 6.10% per year for a 7-year term, 4.00% per year to 6.15% per year for a 10-year term, 4.25% per year to 6.40% per year for a 15-year term, or 4.50% per year to 6.65% 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 0.25% to 3.80% for the 5-year term loan, 1.50% to 3.85% for the 7-year term loan, 1.75% to 3.90% for the 10-year term loan, 2.00% to 4.15% for the 15-year term loan, and 2.25% 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 2.43% per year to 6.05% per year for a 5-year term would be from $179 to $195. The monthly payment for a sample $10,000 loan at a range of 3.75% per year to 6.10% per year for a 7-year term would be from $137 to $148. The monthly payment for a sample $10,000 loan at a range of 4.00% per year to 6.15% per year for a 10-year term would be from $103 to $114. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.40% per year for a 15-year term would be from $77 to $88. The monthly payment for a sample $10,000 loan at a range of 4.50% per year to 6.65% per year for a 20-year term would be from $65 to $77.

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.

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.


4 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.


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 2.19% effective August 10, 2019.


6 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.


7 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 08/01/2019. Variable interest rates may increase after consummation.

2.14% – 6.79%1Undergrad
& Graduate

Visit Earnest

2.14% – 7.84%2Undergrad
& Graduate

Visit SoFi

2.43% – 6.65%3Undergrad
& Graduate

Visit Laurel Road

2.43% – 7.60%4Undergrad
& Graduate

Visit Splash

2.14% – 8.01%5Undergrad
& Graduate

Visit CommonBond

2.06% – 8.93%6Undergrad
& Graduate

Visit Lendkey

2.74% – 7.24%7Undergrad
& Graduate

Visit College Ave

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.