Refinance rates with Splash Financial start at 1.89%.
Checking your rates won’t affect your score.
Note that many student loan lenders and servicers are offering relief options during the coronavirus outbreak, so be sure to also check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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In years past, you were stuck with your student loan interest rates and repayment plan. But as more and more borrowers felt the pinch of student loan repayment, a new industry was born to help make things more manageable: student loan refinancing.
You might have heard about student loan refinancing, but you might not know if it’s right for you. In this guide, you’ll learn what you need in order to decide whether to refinance your student loans.
- What is student loan refinancing?
- Should you refinance? What to consider first
- How to determine your refinancing eligibility
- How to find the best student loan refinancing company for you
- How to prepare for refinancing
- Choosing your refinancing terms
- Deciding to refinance your student loans
Student loan refinancing is the process of obtaining a new loan at a new interest rate. Typically, you can refinance both your federal and private student loans, which involves paying off your old loans and getting a new one with different repayment terms and (hopefully) a better interest rate.
Student loan refinancing is different from consolidation, though many people erroneously use the terms. Consolidation typically refers to taking out a Direct Consolidation Loan and combining all your federal student loans into one loan with one interest rate.
While there are some similarities with refinancing, consolidation doesn’t offer any interest savings. Private student loan borrowers aren’t eligible for consolidation. As a result, refinancing can be a good option for private student loan borrowers or those with a combination of federal and private student loans.
The key benefit of refinancing is the potential to save money in interest over the life of the loan. For example, as of July 1, 2019, federal Direct PLUS loans have an interest rate of 7.08%. Through refinancing, you could get approved for a much lower rate, saving you a lot of money.
Using the extra savings, you could pay more money toward your principal balance, invest or start an emergency savings fund.
Student loan refinancing is a great way to make payments more manageable, but there are important things to consider before you decide to refinance your student loans.
Through the process of refinancing, you are essentially applying for a private loan. If you already have private loans, that might not be an issue. But if you have federal student loans, you’ll give up your federal student loan protections, including:
- Income-driven repayment (IDR) plans: IDR plans are a smart option for those struggling to afford their payments. With a longer repayment term and a monthly payment that is a percentage of your discretionary income, you can dramatically reduce your minimum payment with an IDR plan. But when you refinance, you’re ineligible for IDR plans.
- Loan forgiveness: Federal student loans have some loan forgiveness options, such as the Public Service Loan Forgiveness and Teacher Loan Forgiveness When you refinance, you’re no longer eligible for these programs.
- Deferment and forbearance: If you fall on serious financial hardship, postponing your payments through deferment or forbearance can help. But if you refinance, you may have limited options to postpone your payments.
When you refinance your student loans, you work with a private lender and lose out on the federal protections offered to you with your federal student loans. This doesn’t mean that you shouldn’t look into refinancing as a viable option, but it’s something to consider before moving forward.
The process of refinancing is irreversible, so you can’t go back and get these benefits at a later date. Once you refinance, you’re going to be with your refinancing company for the duration of your repayment.
Because student loan refinancing companies are private lenders, there is more than one option for student loan refinancing. There are many companies in our student loan refinance marketplace from which you can choose. Before you pick one, it’s key to determine whether you’re eligible for a refinancing loan.
Student loan refinancing companies tend to have stricter eligibility terms than you’d have with federal loans. Before you go through the hassle of applying, do your research on the requirements for each lender.
Most lenders require you to have a good credit score, though each lender is different. Lenders also want proof of a stable income and cash flow to support your new loan.
If your credit isn’t great, or if you don’t make enough money, you might need a cosigner to qualify for a loan. A cosigner acts as a guarantee to the lender. If you fall behind on your payments, the cosigner becomes responsible for repayment. Having a cosigner reduces the risk to the lender, making it more likely to approve you for a loan.
To find out if you qualify, research several different student loan refinancing lenders and review their eligibility requirements. Be sure to read the fine print since refinancing may not be available in all states.
Once you’ve assessed your eligibility and narrowed it down to a few possibilities, it’s time to choose the best lender for you. Here are some questions to ask that could help you find the best lender for you:
- Does the lender offer fixed or variable interest rates?
- How much could you save with their interest rate? Use our student loan refinancing calculator to see estimate potential savings.
- What are the repayment terms and how will that affect your monthly payment?
- Do the lenders offer any perks? For example, some allow you to make interest-only payments if you experience financial hardship.
- What are others saying about the lender? Does it have a good reputation?
- Is there an origination fee or prepayment penalty?
- What are the minimum and maximum amounts of debt it will refinance?
- What kind of customer support does it offer? Is it easily accessible?
After doing a comparative analysis between lenders, pick your top three and start applying.
Why three? Even after you’ve assessed your eligibility and chosen your top three lenders, you still have to get approved for refinancing. Each lender has its own requirements, and some are stricter than others. Depending on your credit score and your income, one lender might be more likely to approve you than another.
In the end, you want to have options and find the best lender for you.
Before you apply for student loan refinancing, do a quick financial audit and prepare some documents to help the process move along smoothly. Here are some steps to take to prepare for refinancing:
- List all your federal and private student loan totals.
- Write down your loans’ interest rates next to the total.
- Create a third column and include your loan servicer’s information, including phone, email and mailing address.
- Gather your most recent pay stubs.
- Collect last year’s tax return.
- Check your credit reports from the three major bureaus using AnnualCreditReport.com.
- Check your credit score for free at LendingTree.
Taking these steps can help you prepare to refinance your loans and have all your information in one place.
Through student loan refinancing, you may be able to choose from various repayment terms and interest rates.
Consider your repayment term and assess how it will affect your monthly payment. In other words, will your monthly payment be going up, staying the same, or going down? It all depends on the repayment terms that you choose.
Most refinancing companies offer repayment terms between five and 20 years. Of course, we believe it’s best to pay off your loans as quickly as possible. But you should also make sure that whatever repayment term you choose is manageable for you and allows you to reach other financial goals, too, such as saving for retirement.
With interest rates, assess the impact of choosing a fixed or variable rate. Fixed rates are typically a tad higher than variable rates — but they are fixed, meaning they won’t go up or down over the life of your loan.
Variable rates tend to be lower and can be an attractive option. Variable interest rates are tied to the markets — often the London Interbank Offered Rate (LIBOR).
Before you opt for a variable rate to save money, understand that rates can increase anytime. You could end up with a higher interest rate down the line than if you had selected the fixed-rate option.
If you think you can aggressively pay off your loans in a few years, a variable-rate loan could help you achieve that. But if you choose a longer repayment term, you may be better off with a fixed interest rate.
To save extra money on interest, see if your prospective lender offers autopay discounts. Some lenders will reduce your interest rate by 0.25%, which can help you save money over time.
Refinancing your student loans could be a great way to save money on your student loans, but it’s still a major financial decision. Carefully assess the costs and the benefits of student loan refinancing and choose what’s right for you.
Ready to refinance your loans? Compare offers from multiple student loan refinancing companies to make sure you get your best rate and loan repayment terms.
Interested in refinancing student loans?Here are the top 6 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 5.99%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|1.99% – 6.84%3||Undergrad & Graduate|
|1.91% – 5.25%4||Undergrad & Graduate|
|2.25% – 6.53%5||Undergrad & Graduate|
|2.17% – 4.47%6||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews! |
1 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. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.
2 Important Disclosures for Earnest.
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 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% 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 October 26, 2020, 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 10/26/2020. 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 [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for LendKey.
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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
5 Important Disclosures for SoFi.
6 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are 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.