Updated December 3, 2018

Best Student Loan Refinance: January 2019

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Refinancing your student loans is one of the best money moves you can make. But where should you start? Here are our top recommended student loan refinancing providers.

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Graduating college with student loans is common. Over 44 million graduates hold student loans. The average borrower has nearly $38,000 in student debt. If you aim to pay this off in 10 years, this means paying around $382 per month.

What if that's not affordable? Consider refinancing.

Here are the top student loan refinance and consolidation companies you should not ignore:

Save Money

The great thing about refinancing your student loans is the thousands of dollars you could save on interest.

The right lender can offer you a lower interest rate. This means lower total payments overall. It also means a higher percentage of your payments tackling the principal, which means you pay less interest on the loan.

Of course, this is dependent on your credit and employment. This is assuming you are in better financial shape today than the day you graduated. If so, you may be eligible to refinance.

What's not to love?

Refinancing is especially good for private loans, which has no forgiveness programs. Student loan refinancing is done through private lenders or certain banks or credit unions (not the federal government). So keep in mind that if you refinance federal loans, you will no longer be eligible for federal forgiveness programs.

In this article, you'll learn:

Is it worth it to refinance student loans? Refinancing student loans can be a smart idea if you have good credit, steady income, and are not applying for loan forgiveness or federal income-driven plans. Refinancing can give you a lower interest rate and/or more affordable term options, which could save you thousands in interest.

How to Find the Best Student Loan Refinance Option

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There are many student loan refinance options. The best student loan refinances often have:

  1. Lower interest rate than what you pay now.

  2. Fixed interest rate so you don't have to worry about future interest rate adjustments.

  3. An affordable term that gets you out of debt faster.

Do you have federal student loans? If so, consider if other options are better for you instead. You can be eligible for income-driven plans or loan forgiveness. Even consolidation can make your federal loan repayment more manageable.

To learn more, read:

What to Look for in a Student Refinance Loan

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Before we divulge the top student refinance loan companies, learn what you should be on the lookout for:

  • Low interest rate: The whole point in refinancing is to save money. You want the lowest interest rate, and you want it to be lower than what you pay now. Your personal rate varies based on your credit and income.

    Check the rates from several lenders within 45 days. This way it will only count as one credit inquiry on your credit report.

    Soft Credit Pull versus Hard Credit Pull: There are two different types of credit pulls. When you first ask for a rate estimate, it will be a soft credit pull, which will not affect your credit score. When you are ready to officially apply with a lender, a hard pull will be performed. A hard credit pull will drop your credit score by at least a couple of points. Read more on how to improve your credit score here.

  • Type of interest rate: Lenders offer fixed and variable interest rates. A fixed rate means you know exactly how much you will owe every month for the whole term of the loan. This is best if you're not sure how long you'll need to pay off the debt.

    Variable rates will fluctuate. They're usually lower than fixed rates to start. If you know you can pay your debt off quickly (in the next few years), this could save you more money in the end. However, the rate may increase over time, and your monthly payment amounts would increase.

  • Fees: The lenders on our list don't charge origination fees. But sometimes, choosing a refinance option with an origination fee allows a lower rate, though. Does the lower interest rate make up for the fee? You'll have to determine where you see the greatest savings.

    Prepayment Penalties: In the future, you might decide to pay off your student loans early if you have the money. That's great! But you need to make sure your student loan company won't charge you a prepayment penalty for doing so. Most student loan companies do not do this - and none of the ones on our list do - but you should steer clear of those who do, since you might want to pay off your loans early.

Best Student Loan Refinance Companies

Given the above characteristics, these are our choices for the top student loan refinance companies.

Best Competitive Rates: SoFi

    SoFi Student Loans
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    SoFi Student Loans

    • Keep federal grace period
    • Refinance Parent Plus loans
    • Must have great credit score

    Our Review: (4.6) Is student loan refinancing a good idea? Is SoFi legit? Is NOW a good time to refinance? Read on. The answers may surprise you... Read full review

    Refinance Student Loans

SoFi is not a traditional bank. Its funds come from alumni and various investors in the company. SoFi looks at details about you beyond just your credit score, such as your career and education. A few of the reasons we love SoFi for student loan refinancing include:

  • No origination fee (many lenders charge an origination fee to cover the cost of processing the application and underwriting the loan)

  • Variety of options, including fixed and variable rate loans

  • Rate discounts available for automatic payments (0.25% savings on the rate)

  • Variety of terms to help make the loan affordable (5-, 7-, 10-, 15-, and 20-year terms)

  • Will refinance private and federal student loans

  • Will suspend your payments temporarily if you lose your job

  • Earn money if you refer friends ($100 for every referral)

Is SoFi refinancing legit?
Yes. SoFi is one of the leading student loan refinancing provider. It has refinanced over $18 Billion in student loans since its founding in 2011. In addition to student loan refinancing, SoFi also offers mortgages, mortgage refinancing, and personal loans.

What credit score do you need for a SoFi loan?
SoFi requires a minimum credit score of 650 to be eligible for student loan refinancing. But this doesn't mean you'll automatically be approved if you meet this minimum. SoFi looks at other requirements too, like income, other debts, etc.

Best Merit-Based Lender: Earnest

    Earnest Student Loans
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    Earnest Student Loans

    • Option to skip one payment every 12 months after 6 months of on-time payments
    • Option to switch between variable and fixed rates
    • Focus on other aspects and not just your credit score
    • Require more documentation than other companies
    • Limitations on where you live
    • You must have little to no credit card debt

    Our Review: (4.6) Student lender Earnest offers a brilliant way for graduates to save money on student loan debt. Read on to learn why Earnest is legit... Read full review

Earnest uses unique aspects about your life to qualify you for a student loan refinance. Your savings pattern, job history, and investments determine the rate. A few of the reasons we love Earnest include:

  • Minimum loan amount of just $5,000, which is half of the $10,000 many other banks require

  • Choose the payment you can afford first, then Earnest tailors your rate and term to make that payment work

  • You can switch your fixed interest rate to variable or vice versa every six months at no charge

  • Earnest offers forbearance if you become unemployed due to circumstances outside of your control

  • You can defer your loans if you decide to go back to school (up to 3 years)

  • You can choose your own payment options (bi-weekly, extra payments, etc.)

Tip: A deferment on your loans can be helpful because it means putting your loan payments on hold for a specific period. Make sure you know the terms though - will you be required to make interest-only payments during this time? Will the interest continue to accrue during those three years? Many times, the interest will continue to accrue while you're not making payments, which increases the amount you will owe in the future.

Best for High Balances: Laurel Road

    Laurel Road Student Loans
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    Laurel Road Student Loans

    • Low repayment options for medical residency
    • Keep federal grace period
    • Forgiveness is available due to disability
    • No mobile app
    • Forbearance options are on a case-by-case basis

    Our Review: (4.6) If your student loan interest is too high, consider refinancing with Laurel Road. But wait. Read this review to learn how it works and what to watch out for... Read full review

Laurel Road (previously Darien Rowayton Bank, or DRB) is a large player in the student loan field. It offers student loan refinancing in all 50 states. We love Laurel Road for the following reasons:

  • Offers student loan refinancing in all 50 states

  • No origination fees

  • No maximum limit

  • Up to 1 year of forbearance if you experience economic hardship

  • Offers a 0.25% discounted rate if you sign up for autopay

  • Allows you to choose your term options (5-, 7-, 10-, 15-, and 20-year)

  • Referral bonus of $400 for every friend you refer

Tip: Autopay is a great option for not only your refinanced loans, but all bills. Autopay will prevent you from missing a payment and incurring a late fee. For most student loan companies, setting up autopay can mean between a 0.25% to 0.50% reduced rate.

Best Community-Focused Lender: CommonBond

    CommonBond Student Loans
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    CommonBond Student Loans

    • Hybrid program
    • Quick process - once approved funds will pay your loans within 2 weeks
    • Your state eligibility may restrict options
    • Long process to approval

    Our Review: (4.5) You could try waving a magic wand to banish your student loans for good, but getting a better deal on your interest rate is a more realistic way of getting them to go away faster... Read full review

    Refinance Student Loans

CommonBond provides clients with a streamlined application and transparent process. They provide a simple system and education to keep your student loans in check. A few features we love about CommonBond include:

  • Online application with access to the Care Team via phone, email, or live chat

  • No origination fees

  • CommonBridge program provides support during economic hardship, including postponing payments

  • Referral bonus of $200 for every friend you refer

  • Offers three rate options: fixed, variable, and hybrid (fixed rate for 5 years, then variable rate for 5 years)

  • For every borrower, Commonbond covers the cost of a child's education in the developing world

Note: Don't forget about the two different credit pulls. Refinance companies will usually do a soft credit pull to provide you with a preliminary rate. Once you decide and apply they will need to do a hard credit pull to give you your actual rate. The hard pull will eventually show up on your credit report. As a reminder they will fall off of your credit report after two years and will not affect your FICO score after 12 months.

Best Network of Lenders: LendKey

    LendKey Student Loans
    Read ReviewLearn More

    LendKey Student Loans

    • Offer interest rate reduction beyond auto-debit reduction
    • Excellent customer service
    • Return policy within 30 days you can return your loan
    • Cumbersome application process
    • Lack of transparency regarding loan documents

    Our Review: (4.4) Saving thousands of dollars on your student loans sounds perfect, and that's just what LendKey promises. Is it the real deal, though?... Read full review

    Refinance Student Loans

LendKey provides clients with a quick and easy application. They connect you to hundreds of credit unions and local banks to get you the best rates. A few features we love about LendKey include:

  • No origination fees.

  • Offers interest-only payments on loans for up to four years.

  • Cosigner release options after 12 months.

  • Referral bonuses; $50 for every friend that gets approved and $200 for every friend that takes a loan with LendKey.

  • Multiple terms and rates available such as; 5, 7, 10, 15, and 20 with low variable and fixed interest rates.

Tip: Having a cosigner apply with you for refinancing can increase your odds of getting a better interest rate. A creditworthy cosigner is a parent, family member or close friend that has a positive credit history and is willing to help you with your payments if you become unable to pay. Having a cosigner helps because a lender is looking at two financial scenarios instead of one alone, allowing for better rates.

Other Options for Student Loan Refinance

  • iHelp provides clients with transparency and personal help. Soon they will issue Parent Plus loans for students' parents, too. They offer three repayment options while you're in school: deferment, interest-only payments, and standard interest/principal payments.

  • Purefy is great in that if you're married you can combine loans with your spouse. Purefy also offers discounts on loans, personalized service, and fixed and variable rates.

  • Elfi offers a great incentive program: For every friend you refer, you get $400 and your friend gets $100. Also, if you sign up and receive a loan within one month from your original inquiry you will receive $100.

  • Citizens Bank offers student loan refinancing backed by a bank. The unique thing about it is that it will refinance even if you didn't finish school. You just need to have made 12 consecutive on-time payments on your current loan.

  • College Ave offers flexible payments, including interest-only or full principal and interest. There are 11 terms to choose from, starting from 5 years to 15 years.

  • Splash Financial is great if you have medical school loans. The minimum you can refinance is $25,001 and the maximum is $346,000. You can start refinancing as soon as you start your residency.

  • Discover is a popular online bank that also offers student loan refinancing. It allows you to consolidate and refinance even while you're still in school. And you can choose which loans you want to refinance.

  • Wells Fargo's student loan refinancing program offers great discounts. There are 2 ways to get an interest rate discount. You get up to 0.50% discount if you (or your cosigner) are a Wells Fargo checking customer. And you can get another 0.25% discount when you enroll in auto payments.

  • First Republic offers some of the lowest fixed rates, as well as an amazing incentive for paying your loan off early. If you can pay back in full within 4 years, you earn back the interest paid on the loan (up to 2% of the original loan balance).

  • PNC Bank's Education Refinance Loan requires 2 years of steady income or employment. It offers a 0.50% rate discount when you set up auto payments. You can choose between a 10 or 15-year repayment term.

  • PenFed offers lower interest rates than other banks and credit unions. It even refinances Parent PLUS loans, and allows spouses to combine their loans. You can be a member of PenFed Credit Union by joining Voices for America's Troops for a small membership fee.

Why Refinance Your Student Loans?

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  • Save money. This is the biggest purpose of refinancing student loans. If you can obtain a lower interest rate, you'll save thousands on interest over the life of the loan.

  • Simplify payments. Many borrowers also refinance to make managing multiple student loans easier. When you bring several loans together into one loan, you'll only have one monthly payment to keep track of.

  • Pay off early. Most student refinance loans don't have a prepayment penalty. You can get ahead by paying your loans off early. This means paying less interest in the end, saving you money.

Tip: Did you know that the London Interbank Offered Rate (LIBOR) may be tied to your student loans. About half of all interest rates on variable interest rate loans are determined by LIBOR. What is LIBOR? It is the average interest rate that is paid on deposits of U.S. dollars in the London market. Basically, it's banks charging other banks for your loans.

What Lenders are Looking For

Wondering if you'll get approved? Here are some things that lenders will look at:

  • Credit score. Your credit score is an overall look at your financial health. A higher credit score can get you a better interest rate on your student loan. Most lenders want to see a credit score in the high 600s. Lenders like SoFi and Earnest have a minimum credit score requirement of 650.

  • Income & work status. Lenders want to see that you have a steady job and recurring income. That way, they know you're capable of making monthly payments. Some lenders may approve you for refinancing if you have not started working, but have a written job offer.

  • Debt to income ratio. You may have other debt in your life, like credit card debt or auto loans. Lenders will look at how much debt you have compared to your income. If you have a lot of debt, they may question your ability to pay your student loan debt on top of all.

How to Maximize Your Chances for Approval

For the best odds to getting approved for student loan finance at the best rates, consider these:

  • Lower your debt. The best way to improve your credit score and debt-to-income ratio is to reduce your debt. Pay off as much of your debt as possible. Especially unsecured debt, like credit card debt.

  • Apply to multiple lenders. It's smart to shop around so you can see who gives you the best rate. A lot of lenders only do a soft pull on your credit for pre-approval. All inquires within a 45-day window will be counted as one single inquiry on your credit report. So it's okay to submit your information to a few lenders. Once a lender gives you a rate quote, you are under no obligation to take it.

  • Get a cosigner. And finally, if you're unable to obtain a loan on your own, you can get a cosigner (such as a parent). This person will agree to be responsible for your loans if you default, so you must have a good relationship. If your cosigner has good credit and income, they can help you get approved and/or get a lower interest rate.

    A lot of lenders offer a cosigner release after a certain period of time. This way, your cosigners won't be forced to stay on your loan until the end.

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Before you refinance, ask yourself the following questions:

  • Have you considered federal loan repayment options? Federal repayment plans or loan consolidation could be options for you. Determine what you can afford. Look at your financial goals. Then decide if refinancing is the right choice. For example, if you are eligible for loan forgiveness, why refinance at all?

  • Will a refinance shorten your term? A lower interest rate doesn't do you any good if you take a longer term. A lower payment may sound appealing. However, if you stretch the payments out over 20 years rather than 10, you'll pay much more in interest in the end. This could mean a difference of thousands of dollars.

    Many refinance companies offer many repayment terms such as 5, 7, 10, 15, and 20 years. Pick the shortest term for which you can easily afford the payments, which will provide you the biggest savings on interest over the life of the loan.

  • Will a refinance make your payments more affordable? On the other hand, a shorter term could mean higher monthly payments. It doesn't make sense to refinance if you can't afford the payments. A default is much worse than stretching your payments out for a longer term.

Use caution when refinancing federal loans. You could lose any loan forgiveness options you may have earned. Once you refinance into a private loan, the federal benefits will disappear.

There are Other Options Too

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Refinancing your student loans isn't the only option. Before you jump in and refinance, make sure you exhaust your other options.

Contact your loan servicer and discuss with them these options:

  • Federal loan forgiveness: Certain programs forgive a portion of your outstanding student loans. If you work in public service, as a teacher, or child care provider, inquire about these programs. They usually require you to enroll in an income-based repayment plan. After a specific period, you may receive forgiveness of the remainder of your loan balances - meaning you don't owe any more money.

  • Income repayment plan: If you have federal loans, you may be eligible for an income repayment plan. The DOE tailors your payments to your current income. The payments change as your income changes. This typically goes on for 20 years. After that point, most programs forgive the remaining balance.

  • Leave your loan alone: You always have the option to stick with the Standard Repayment Plan. You'll pay your loan off in 10 years at today's rate. If the rate you're paying now is the lowest available in the market, there is no need to refinance. This assumes you can afford the standard payment each month, though.

What is a loan servicer? A loan servicer is the company that handles tasks related to your student loan, including billing. The loan servicer may help you with repayment plans, consolidation, and other options.

Tip: You may live in a state that offers refinance options:

These are just a few; check your state's judicial site for more information. There may be incentives to using a refinance option within your own state, so consider these options too.

Common Questions

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  • What's the difference between refinancing and consolidating?
    Refinancing is when you get a new interest rate and term based on your credit. You can combine both federal and private student loans and refinance them together. Consolidating is for federal loans only. It means lumping multiple loans into one, and you'll pay a weighted average of all interest rates on your loans.

  • Is it better to refinance or consolidate student loans?
    Refinancing student loans gives you the option to find a better rate and term, which can save you a ton in interest. It's a good option if you have good credit and can get a lower rate. However, once you refinance, you are ineligible for forgiveness, so make sure you don't plan to apply for any forgiveness programs.

    Consolidating doesn't usually save you money; it simply reorganizes your student debts. It's a good option if you need to make your federal loans more manageable. With consolidation, you may enter an income driven repayment plan which could have up to a 25-year repayment period.

  • Is it worth it to refinance student loans?
    Refinancing student loans can save you a lot of money in the long run. You can get a lower interest rate, which can save you thousands in interest. It can also simply your payments by grouping multiple loans into just one new loan with one monthly payment.

    But that said, there are some situations when refinancing is not worth it:

    • If you're planning to apply for forgiveness programs
    • If you have low income and want to apply for income-based repayment plans
    • If you have bad credit and won't qualify for a low rate
    • If you are almost done with paying back the loans

  • Does it cost money to refinance student loans?
    All the student loan refinance lenders on our list do not charge an application or origination fee. So it does not cost anything to apply and secure a loan. There are also no pre-payment fees, so it won't cost you anything to pay it off early.

  • What credit score do you need to get approved?
    It goes without saying, the higher your score the better. Each lender has their own requirements. Basically, they don't want late payments, collections, or any type of default on your credit report. Typically, lenders want to see credit scores in the high 600s. However, the lenders we chose don't focus solely on your credit score. They also look at your employment history, savings patterns, and potential for the future.

  • How do you prove you can afford the refinance?The lender will ask you for appropriate documents. Be prepared to show your last few paystubs and tax returns. Lenders will look for consistent income and employment over the last year or so. They don't base your approval solely on your income. But it does play a big role.

  • How do you qualify to refinance? Usually, you will need to be at least 18, have obtained a degree, and have stable income. Then just visit one or more of the websites suggested above and fill in your information. You can get pre-approvals without doing a hard pull on your credit.

    You will receive offers for loan refinancing. You will still need to officially apply to get your final rate. Make sure you read and understand the rates and terms of your offer(s). Finally, accept the terms of your chosen loan refinance offer, and get on your way to lower student loan interest rates.

  • When should you refinance your student loans?
    Refinancing is a smart idea if you have high interest rates on your student loans AND you don't plan to apply for forgiveness programs. Refinance as soon as you have a strong credit score and stable income. This will ensure that you get the best rates.

  • Does refinancing your student loans hurt your credit?
    A lot of lenders only do a soft pull to pre-approve you for refinancing, which does not hurt your credit. Once you decide to officially apply, the lender will have to do a hard pull. But that only affects your credit score by a couple of points. All inquiries within 45 days are typically treated as one inquiry on your credit report.

  • Can student loans be forgiven?
    There are a variety of loan-forgiveness programs. The federal government offers 4 income-driven repayment plans. You can get the rest of your loans forgiven after making 20-25 years of payments.

    There are also lots of forgiveness programs for those who work in certain sectors, like teachers, nurses, and doctors. You can get portions of your loans forgiven when you work for a certain number of years. Typically, you must work in an under-served area.

  • Can defaulted student loans be removed from credit report?
    Typically, a delinquency or default of any kind will stay on your credit report for 7 years. But there is an option to get your student loan default removed sooner under the rehabilitation program. This can only be done once for federal loans. You agree to a payment amount and must make on-time payments for 9 months. Then the default status will be removed and your credit history restored.

  • Do student loans affect credit score while still in school?
    Your student loans will show up on your credit report while you're in school, but they will not affect your credit score. Usually, you get a 6-month grace period after graduation before you need to start paying. If you do decide to start making payments while in school, then this will only have a positive effect on your credit score as you make on-time monthly payments.

  • Can you refinance student loans without a degree?
    Most lenders do require a completed degree for student loan refinance. However, Citizens Bank is one of the few lenders who will refinance even if you never finished school. You must make at least 12 consecutive, on-time monthly payments on your current loans before applying.

  • Do you have to graduate to refinance student loans?
    Typically, lenders require that you have graduated. Without graduating, lenders don't know if you will be able to find a job or your income potential. There are some lenders who allow you to start refinancing even when you're still in school. Earnest will refinance your student loans if you are in your final semester at school and have a written job offer that starts within 6 months (or already have consistent income).

  • Do banks refinance student loans?
    Only a handful of banks and credit unions do student loan refinancing if you'd rather get a loan backed by a bank. These banks include: Wells Fargo, Discover, Citizens Bank, PNC Bank, First Republic, PenFed, and Alliant Credit Union.

  • How can I reduce my student loan debt?
    You can reduce your student loans by one of two ways: pay them off faster, or find ways to get them forgiven.

    If you don't plan to apply for any forgiveness programs, then find ways to pay off the loans faster so that there's less interest. Some ways include:

    • Refinance student loans to a lower interest rate
    • Ask about employer reimbursement
    • Pay more than the monthly payment
    • Pay ahead of time, or make an extra payment each month
    • Make more income, like getting a side job or renting out a spare room
    • Apply any tax returns or gift money to paying off student loans

Bottom Line

Student loan refinancing is a great way to take control of your financial future. Ignoring your options could leave you wasting money on interest for many years. Review our favorite student loan refinance lenders and see if you have the option to save money too.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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