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10 Best Student Loan Refinance of 2018

Refinancing your student loan can lower your interest rate, potentially saving you thousands of dollars over the life of your loan. Here we compare the top private student loan providers offering refinance and consolidation loans with competitive rates and terms.

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Student loan refinancing is often confused with the similar process of student loan consolidation, yet there are some key differences between the two. Refinancing entails taking an existing loan and replacing it or paying it off with a new loan featuring a different rate and loan terms. The benefits of refinancing include being able to lower the annual percentage rate (APR) of the previous loan, switching from a variable to a fixed rate, or reducing the monthly repayments by extending the loan term, which could imply having to pay more toward interests over the life of the loan. Another important detail to keep in mind when considering this option is that federal student loans may only be refinanced through private lenders and the process could entail losing the benefits offered by the federal loan, such as income-driven repayments. Consolidating a loan, on the other hand, is akin to rolling all your existing loans into a single loan with a different interest rate and term. Borrowers can consolidate all their federal student loans through a Direct Consolidation Loan or consolidate all their private student loans through a private lender. Although some private lenders offer the option of consolidating federal student loans along with private student loans, borrowers should be aware that, like refinancing, consolidating federal loans through a private lender could mean losing the flexible repayment options characteristic of federal student loans.

Refinancing and consolidation may be good options for borrowers whose credit scores have improved since taking out their original loans and who are looking to obtain better interest rates or adjust the terms of their loans. One of the main reasons borrowers seek refinancing is to change from a variable interest rate, meaning a rate that fluctuates with market changes and can increase or decrease dramatically throughout the life of the loan, to a fixed interest rate that remains the same until the loan is paid off in full. Others, however, seek to refinance in order to change the actual loan term or loan duration, extending it to lower their monthly repayment amount or shortening it to decrease overall interests. Since federal student loans have featured fixed rated for the past decade, this option may not be the most favorable for students borrowers with few federal loans and no private student loans. A Direct Consolidation Loan through the U.S. Department of Education may offer greater advantages for the former, while refinancing could be a good alternative for those with several private student loans who are struggling to keep track of repayments and want to simplify their finances.

Before opting to refinance or consolidate, student borrowers should carefully assess their financial situation and the terms of their current loan(s). Those interested in refinancing through a private lender, which is typically referred to as private student loan consolidation, should bear in mind that, just as with any other type of loan, the lender will look at their credit and employment history, debt-to-income ratio, and even educational background. Some lenders may require the applicant to have completed a degree to qualify, while others look for high earners who will be more likely to repay their loans in full and on time. Not all lenders set such stringent qualification requirements, yet most will look at past payment and credit history to ascertain the risk involved in lending to a given borrower. The former is an industry-wide practice founded on the fact that student loans are unsecured debt instruments, meaning they provide no collateral the lender can use as compensation in the event the borrower defaults.

Those considering refinancing should look closely at the terms of their new loan, especially the APR. Longer loan terms typically translate into lower monthly repayment amounts and higher APRs because payments are spread out over a longer period. Another factor to consider is whether the new loan offers protections and repayment options similar to those of the original loan. Again, federal student loans generally offer fixed interest rates and less stringent payment options that include income-driven repayment, deferment, and forbearance. Although some lenders may offer deferred payments and options for those struggling with financial hardship, private student loans aren't forgiven upon the student borrower's death like federal student loans but are inherited by the borrower's heirs. Finally, take into account the tax implications of refinancing if you claim the student loan interest tax deduction, as certain circumstances could change your eligibility for this benefit.

 


Top 10 Companies

#1
Our Partner
9.8 / 10
  • Rates start as low as 2.50% variable and 3.20% fixed APR
  • No hidden fees, origination fees or prepayment penalties
  • Find your rate in two minutes
  • Checking your rates does not affect your credit score
  • Get the best offers from top lenders
  • Consolidate some or all to make single payments
  • Get prequalified in minutes 
#2
Our Partner
9.7 / 10
  • Saves you $30,939 on average for student loan refinancing
  • More rates to choose from = more flexibility
  • Earnest has no fees of any kind
  • Unemployment protection
  • Pick your own monthly payment and Earnest matches you with an interest rate and term
  • Get a quick rate estimate in 2 minutes
  • Exceptional customer service for the life of the loan. Call, email or text them anytime
  • Must have at least a 680 FICO Score and $40K income
#3
Our Partner
9.6 / 10
  • Get pre-approved quotes from credit unions and small banks
  • Rates start at 2.58% APR (variable) and 3.15% APR (fixed)
  • Reduce interest rate by 0.25% by signing up for automatic payments
  • No fees or prepayment penalties
  • BBB-accredited and rated A+
#4
Our Partner
9.6 / 10
  • Get pre-approved in 2 minutes
  • Easy-to-use loan calculator
  • As low as 3.25% fixed or 2.56% variable APR with AutoPay
  • Up to 20-year loan terms
  • Career Coaches and Wealth Advisors for SoFi members
  • Get a 0.125% discount on other SoFi loan products
#5
Our Partner
9.3 / 10
  • Low-interest rates and a variety of repayment options
  • Consolidate both federal and private student loans
  • APRs start at 2.69% (variable) and 3.09% (fixed)
  • Repayment terms of 5, 7, 10, 15, and 20 years
  • Get a $100 bonus when you accept the loan offer within 30 days of application date
#6
Our Partner
9.2 / 10
  • Consolidation loan option of federal and private student loans
  • Consolidate while enrolled half-time, during grace period, or after graduation
  • Generous deferment and forbearance programs
  • Fixed and variable interest rates
  • No fees or prepayment penalties
#7
Our Partner
9.1 / 10
  • Rates as low as 2.43% APR
  • Compare quotes from up to 5 lenders in 90 seconds
  • Receiving quotes will not affect your credit score
  • Save time by viewing offers online
  • Zero application, origination, or pre-payment fees
#8
Our Partner
9.1 / 10
  • Competitive fixed and variable rates
  • Apply in 3 minutes or less
  • Flexible terms and repayment options
  • No application or origination fees
  • Refinance amounts as low as $5,000 (federal & private)
  • Earn a 0.25% interest rate reduction for enrolling in auto-pay
  • Get an additional 0.25% reduction for having a Nationwide Bank account
#9
Our Partner
8.8 / 10
  • Get a pre-approval quote in less than 5 minutes
  • No application fees, origination fees, or prepayment penalties
  • Refinance up to $500,000 in federal and private student loans
  • Economic forbearance and unemployment protections
  • Fixed, variable, and hybrid interest rates
#10
Our Partner
8.0 / 10

  • Safe and secure online marketplace 
  • Affiliated with top-rated student loan refinancing lenders
  • Compare rates from a comprehensive network of lenders
  • Additional educational resources on student loan refinancing process


How We Compare Student Loan Refinance

Loan Specifics

40%

When comparing student loan refinance lenders, it's important to consider factors such as how much money will be saved in refinancing a loan based on the new interest rate as well as the repayment terms and conditions of the new loan. Federal student loans can be consolidated, but not refinanced, as a Direct Consolidation Loan, which borrowers can use to combine several federal student loans into one loan. The interest rate of the consolidation loan is calculated by averaging the interest rates of all the loans being consolidated, meaning the interest rate could be higher or lower. With some private lenders, federal and private student loans can be consolidated into one new loan, with a lower annual interest rate (APR) as well as a new term. However, in doing so with federal student loans, the borrower loses access to important benefits such as federal loan forgiveness programs and special repayment plans, which are not available through private lenders. Private student refinance loan lenders typically offer different loan terms, meaning the time allotted to pay off the principal loan amount and accrued interest. This is also true with federal direct consolidation loans. A refinanced loan term is generally 10 years, yet shorter or longer terms may be available. 

Interest rates, which are the proportion of a loan charged by a lender to a borrower for the use of its funds, vary by lender and loan type. The federal direct consolidation loan typically offers slightly better rates and flexible repayment terms, as the government doesn't take into account the applicant's creditworthiness or ability to repay what is owed. These types of loans also feature fixed rates, meaning rates remain the same for the life of the loan. In contrast, private student refinance loan rates can be either fixed or variable, i.e., subject to market fluctuations, and are based on the borrower's or cosigner's debt-to-income ratio and credit worthiness and history. Remember to take into account that shorter loan terms mean fewer monthly repayments and larger repayment amounts, yet less overall interest, while longer loan terms translate to more monthly repayments, smaller monthly repayment amounts, and more overall interests.

Loan Types

Undergraduate Loans  These types of loans are designed for undergraduate students undergoing studies in a degree-granting higher education institution.

Graduate Student Loans  These loans are intended to cover tuition expenses for medical, dental, MBA, and masters or doctorate students.

Career Training Loans— These loans cover education expenses for those undergoing professional training or working towards a technical certificate at a non-degree-granting institution.

Federal Loans — The direct consolidation loan is available through the U.S. government's Department of Education and covers the consolidation of federal loans only.

Parent Loans  As the name suggests, these loans are for parents of students working towards a bachelor's, associate's, or graduate degree or certificate at a degree-granting institution.

Private Loans — These loans (new, refinanced, consolidated) are available through private lenders such as banking institutions, credit unions, community banks as well as fintech companies and typically cover cost-of-attendance expenses.

K-12 Loans  These loans are for the parents of children enrolled in a private school and can cover from kindergarten to high-school.

Maximum Loan Amount

The maximum loan amount refers to the largest amount a lending institution would be willing to lend a borrower.

Loan Term

The loan term refers to the time the borrower commits to the rate, terms, and conditions of a loan or the period before the borrower must pay the loan in full.

Interest Rates

• Fixed Rates  The interest rate refers to the total amount a borrower will pay for borrowing from a lender, which is expressed as a percentage of the principal loan amount. Fixed rates will remain the same for the life or the loan unless the borrower opts to refinance.

• Variable Rates — Variable rates are interest rates that change over the life of a loan unless the borrower opts to refinance. That typically means the borrower may have to pay more or less, depending on market fluctuations, for the borrowed funds.

Fixed APR Range

The APR refers to the Annual Percentage Rate, which is the total yearly cost of the borrowed funds to be paid over the term of the loan. That also includes fees and additional costs associated with borrowing. Fixed APRs remain level for the life of the loan.

Variable APR Range

The APR refers to the Annual Percentage Rate or total yearly cost of borrowing from a lender. Variable APRs can fluctuate with market changes over the life of the loan.

Fees

• Loan Application Fees  An upfront fee associated with processing a loan application.

• Loan Origination Fees  An upfront fee associated with the processing of a new loan application. These are based on a percentage of the total loan amount.

• Late Payment Fees — As the name suggests, these fees apply when a borrower fails to make a timely loan repayment.

• Collection Fees — Collection fees are due upon defaulting or failing to meet several loan repayments.

• Grace Period  The grace period refers to a period of approximately six months between the borrowing student's graduation date and the date of the first scheduled repayment.

Deferment or Forbearance

With deferment or forbearance qualifying borrowers have the option of temporarily suspending loan repayments or reducing loan repayment amounts for a specified period. This option is more widely available for the recipients of federal student loans, yet some private lenders may also offer it.

Cosigner Release

cosigner is someone who endorses, guarantees or backs up a loan for a borrower who doesn't have sufficient income or credit history or whose credit is affected. In the event the borrower defaults or fails to pay back the loan, the cosigner—who can be a parent, guardian, or friend with good to excellent credit and the financial means to repay the loan—is responsible for doing so. When a lender offers a cosigner release, the cosigner is eligible to be removed from the loan agreement, so only the borrower is responsible for making repayments.

Repayment Options

• Deferment  A repayment option most often offered to those who have taken out federal loans and are having a difficult time meeting monthly repayments. It allows the borrower to temporarily suspend payments or decrease the monthly repayment amount until the individual has the means to continue regular payments. Some private lenders also offer this option.

• Immediate repayment — Student refinance or consolidated loan repayments typically are due 30-45 days after the lender has paid off the original lenders' loan balance.

• Interest-only payments  Payments that go toward the accrued interest while the borrower is in school. The student is only required to make payments toward the principal amount after graduation or dropping below half-time status.


Qualifications

25%

To qualify for a federal Direct Consolidation Loan, the applicant must fill out a loan application form either online or complete it and send it by postal mail. Additionally, the borrower must meet the following eligibility requirements:

1. Have at least one Direct Consolidation Loan or Federal Family Education Loan (FFEL) that is in grace or repayment status (repayment status includes loans that are in a deferment or forbearance)

2. Can only consolidate loans(s) after graduation, have left school, or dropped below half-time enrollment

3. Cannot consolidate loans while in school 

4. Cannot consolidate a defaulted loan until wage garnishment has been lifted

5. Can consolidate most defaulted education loans, if the borrower: 
    • Makes satisfactory repayment arrangements with their current loan servicer(s) or
    • Agrees to repay the new consolidation loan under one of the income-driven repayment plans

As for private student loan refinance providers, only the loan application form will be required along with any additional income verification documents. Private lenders will typically look at the applicant's credit score and history, debt-to-income ratio, repayment history on existing student loans, and the completion of a degree (required by some lenders). If the borrower doesn't have sufficient income or credit history, they may apply with a cosigner who will be responsible for paying off the loan in the event they default. 

 


Customer Experience

15%

The lender's customer service standards is another relevant factor to consider when shopping for private student loan refinance providers. Competitive lenders will seek to provide features and benefits that will make its products more attractive to prospective borrowers. This is particularly important in the student lending services sector. For that reason, providers may offer discounts for those who sign up for direct debit and offer additional services like 24/7 support.

Online Quotes

Private lenders often provide online quotes that detail the interest rate and loan amount a borrower would be able to qualify for based on their qualifications and requested loan amount.

Refinancing Loan Calculator

Refinancing loan calculators allow prospective borrowers to calculate details such as monthly repayment amounts on their refinanced or consolidated loans based on existing loan details, credit score, the term of the loan, and the type of interest rate (fixed vs. variable).

Discounts

Some lenders offer loan discounts for borrowers who sign up for direct debit or make timely payments. Some may even waive origination fees to be more competitive. Discounts vary from one lender to another, and some may not offer them at all.

Additional Services

Student refinance loan providers may offer additional services such as Live Chat, 24/7 customer support, or career support, which aims to help borrowers with employment opportunities based on the borrower’s degree.

Processing Time

Processing Time: This is the total amount of time required by a lender to process a borrower's student loan refinance application, and can vary per lender.


Company Reputation

20%

When comparing student loan refinance providers, it's important to look at the lender's reputability within the industry. Reputable companies will be transparent with regard to its products and services, and one should be able to find some online information on the company and its founders. Other sources with which we typically ascertain a lender's reputation are the Better Business Bureau and Trustpilot.com, which are online customer review platforms where consumers can provide feedback on the products and services of numerous companies across different business sectors.

BBB Rating

The Better Business Bureau or BBB has been helping consumers make informed decisions for over a hundred years. The bureau helps set the standards for marketplace trust based on two main factors: integrity and consistent performance. It not only provides customer reviews but also accredit companies that meet the bureau's high ethical business standards and promptly reply to consumer feedback.

Trust Pilot Rating

Trustpilot.com is an online review community where customers can share their experiences with companies offering a broad range of products and services. Companies with high ratings on Trustpilot have met high customer service standards and are generally deemed trustworthy.



What's important to know about Student Loan Refinance?


Why should I refinance my student loan?

The two main reasons people refinance student loans—or any loan in general—are to lower the interest rate or change the loan term. A lower interest rate means you will pay less over the life of the loan, which can also mean you will pay less every month. A longer loan term may mean paying more over the life of the loan, but the monthly payments can go down considerably, depending on the term you choose. On the other hand, a borrower can refinance to obtain a shorter loan term if they want to get rid of the debt quickly or pay less money in total for the loan. Many people wait until their credit score has increased by several dozen points before refinancing, which improves the odds of getting a lower APR.

Can I refinance a federal student loan?

The only way to refinance a federal student loan is to take out a refinancing loan with a private lender. The Department of Education does not have a loan refinancing program in place, because every student borrower receives the lowest possible interest rate the first time around; therefore, refinancing with a federal loan won't get you a lower APR. Student borrowers interested in refinancing can turn their federal student loan into a private student loan. However, keep in mind that private interest rates tend to be higher than federal interest rates because your credit score is the deciding factor and most students don't have excellent credit scores. Also, turning your federal loan into a private loan means you will lose many of the benefits of federal loans, such as loan forgiveness programs, deferment, and special repayment plans.

Nevertheless, the Department of Education has a Direct Consolidation Loan, which borrowers can use to combine several federal student loans into a single loan. Though similar to refinancing, consolidating your federal loans won't automatically get you a lower interest rate. The interest rate of your Consolidation Loan is calculated by averaging the interest rates of all your loans, which won't necessarily mean you'll pay less in total. However, consolidating your federal student loans gives you access to longer repayment terms, as long as 30 years, which means you'll likely pay less every month.

How can I qualify for student loan refinancing?

To qualify for student loan refinancing, you must meet the requirements of each lender, which can vary. However, most lenders will ask eligible applicants to be at least 18 years old and to be U.S. citizens or permanent legal residents. Lenders will look at your credit history to see how much you owe in total and how faithfully you have made payments towards your student loans in the past. You will also be asked to provide proof of employment and income, which is used to calculate your debt-to-income ratio, an important measure in determining whether you will be able to meet a new obligation. Most lenders will require that you either have a degree from a qualifying school or be about to graduate. There may be additional requirements, like a minimum FICO score, a minimum or maximum amount to be refinanced, and state of residence (lenders may not be licensed to operate in all 50 states).

Can I refinance my student loan without a college degree?

Unfortunately, most lenders require that you have a degree from a qualifying institution before you can refinance your student loan. There are some lenders out there, like Citizens Bank, that accept borrowers who didn't graduate. Degree-less borrowers must meet additional requirements, such as having made a minimum of 12 timely payments before refinancing, while students with a bachelor's degree from an accredited university are only required to make 3 payments.

Is refinancing bad for my credit?

Refinancing affects your credit, but not necessarily in a bad way. When you apply for a loan (as you would when you apply for refinancing), the financial institution makes a hard inquiry into your credit report, which will decrease your credit score by a few points. However, the points are usually restored within a few weeks, so your score doesn't take a permanent hit. If you apply for refinancing with several lenders, you may lose more points, but again, the score should go back to normal after a short time. On the other hand, consider the positive ways refinancing can affect your credit. By obtaining a lower interest rate or decreasing your monthly payment, you may be better equipped to keep up with monthly repayments. Paying on time every month will have a very good impact on your credit history and score.

What’s the difference between consolidation and refinancing?

Refinancing refers to replacing a current loan with a new loan for the purpose of reducing the interest rate, extending the loan repayment term, changing the lender, or removing a cosigner, among other reasons. The process consists in taking out a new loan for the total amount due in the current loan and using the money to pay off the debt, essentially replacing it. One may refinance personal loans, car loans, mortgages, or student loans.

Consolidation, though similar in method, is primarily a way of reducing the number of debt obligations by replacing several loans with a single loan. Many people use consolidation loans to manage their debt when, for example, having to make multiple monthly payments with different due dates becomes confusing. In the process of consolidating, however, one can obtain many of the benefits of refinancing (lower interest rate, longer term, etc.)

Can I refinance if I filed for bankruptcy?

Refinancing a student loan after filing for bankruptcy can be difficult, but not impossible. Bankruptcies remain on your credit history for seven years (Chapter 13 filing) or ten years (Chapters 7 and 11), so every time you apply for credit, the financial institution will see the record and take it into account when considering your application. A bankruptcy also lowers your credit score, sometimes by as much as 200 points. However, as the years pass and you consistently make timely payments on your existing accounts, the bankruptcy’s impact is lessened and applying for credit becomes easier. Many lenders place a time limit before you can refinance, often three or five years. Applying with a cosigner can improve your chances of approval because the person’s credit history and FICO score are considered alongside yours. Applying with a cosigner may also get you a lower interest rate.



Best Overall
Our Partner
9.8 / 10
  • Rates start as low as 2.50% variable and 3.20% fixed APR
  • No hidden fees, origination fees or prepayment penalties
  • Find your rate in two minutes
  • Checking your rates does not affect your credit score
  • Get the best offers from top lenders
  • Consolidate some or all to make single payments
  • Get prequalified in minutes