Best Student Loan Refinance: March 2019

Refinancing your student loans is a smart money move. You'll need to start by finding the best provider. Here's a list of our top recommended student loan refinancing companies.

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

• SoFi (for best competitive rates)
  
• Earnest (for those with less credit history)
  
• Laurel Road (for high balances)
  
• CommonBond (for best community-focused lender)
  
• LendKey (for small banks and credit unions offers)
  
• Splash Financial (for medical school loans)

Refinancing your student loans with the right lender could save you thousands in interest. This means lower total payments overall and a higher percentage of your payments going toward the principal.

The result? You'll pay less interest on your student loans.

Of course, this is dependent on your credit and employment. If you're in better financial shape today when you graduated, you may be eligible to refinance. Keep reading to learn how.

• Should You Refinance Your Student Loans
  
• What to Look For in a Student Loan Refinance
  
• Best Student Loan Refinance Companies
  
  • SoFi: Best Competitive Rates
    
  • Earnest: Best Merit-Based Lender
    
  • Laurel Road: Best for High Balances
    
  • CommonBond: Best Community-Focused Lender
    
  • LendKey: Best Network of Lenders
• Other Options
  
• Why Refinance Student Loans
  
• What Lenders are Looking For
  
• How to Maximize your Chances for Approval
  
• Is Refinancing Right for You?
  
• Common Questions

Should You Refinance Your Student Loans

The benefits of refinancing depend on the kinds of loans you have.

Federal Loans
With these loans, options like income-driven plans or loan forgiveness may be better than refinancing. Keep in mind that if you refinance federal loans, you will no longer be eligible for federal forgiveness programs.

Instead, consider consolidating your federal loans to make repayment more manageable.

Learn more about your options with these articles.

• How To Get Your Student Loans Forgiven
  
• Is It Better to Consolidate Student Loans

Private Loans
These loans have no forgiveness programs so refinancing makes sense. Student loan refinancing is done through private lenders or certain banks or credit unions (not the federal government).

What to Look for in a Student Refinance Loan

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The best student loan refinances often have:

Low interest
You want the lowest possible interest rate - and certainly lower than the one you pay now. Your personal rate will vary based on your credit and income. Don't be afraid to shop around.

Steady rates
Lenders offer both fixed and variable interest rates.

• Fixed rate loans won't change 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 are usually lower to start but may increase over time. If you can pay off your debt in the next few years, this could save you more money. Otherwise, your monthly payment amounts may rise.

Reasonable terms
A shorter, affordable term will get you out of debt sooner. But watch for Prepayment Penalties. These are fees a lender may charge if you pay off your loans early.

Most student loan companies do not charge these - and none of the ones on our list do. Steer clear of those that do.

No fees
The lenders on our list don't charge origination fees. But choosing a refinance option with an origination fee might get you a lower rate.

Lenders may charge these to cover the cost of processing the application and underwriting the loan. Does that interest rate make up for the fee? You'll need to figure out the best way to save.

Best Student Loan Refinance Companies

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Here are our choices for the top student loan refinance companies.

Best Competitive Rates: SoFi

SoFi Student Loans
Pros: Keep federal grace period Refinance Parent Plus loans

Cons: 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 one of the leading student loan refinancing provider. It's not a traditional bank - the funds come from alumni and various investors in the company.

The company looks at details 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

• Variety of options, including fixed and variable rate loans

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

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

• Private and federal student loan options

• Payment suspension if you lose your job

• Referral bonus of $100 per friend

SoFi: Refinance Student Loans
Click Here to Find Your Rate

Best Merit-Based Lender: Earnest

Earnest Student Loans
Pros: 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

Cons: 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 things like your savings pattern, job history, and investments to determine our interest rate. Here are a few reasons we love Earnest:

• $5,000 minimum loan amount - half the $10,000 that many other banks require

• You choose your payment, then Earnest tailors the rate and term to make it work

• Ability to switch rates Change between fixed and variable interest every six months at no charge

• Earnest offers forbearance if you lose your job due to circumstances outside of your control

• Defer your loans if you decide to go back to school (up to 3 years)

• Choose from several payment options (bi-weekly, extra payments, etc.)

Best for High Balances: Laurel Road

Laurel Road Student Loans
Pros: Low repayment options for medical residency Keep federal grace period Forgiveness is available due to disability

Cons: 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) offers student loan refinancing in all 50 states. We love Laurel Road for these reasons:

• Available in all 50 states

• No origination fees

• No maximum limit

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

• 0.25% discounted rate if you sign up for autopay

• Term options including 5-, 7-, 10-, 15-, and 20-year

• Referral bonus of $400 for every friend you refer

Best Community-Focused Lender: CommonBond

CommonBond Student Loans
Pros: Hybrid program Quick process - once approved funds will pay your loans within 2 weeks

Cons: Your state eligibility may restrict options Long process to approval
Our Review: (4.5) CommonBond offers competitive rates for student loan refinance along with a strong social mission. Is it right for you? See the pros and cons... Read full review
Refinance Student Loans

CommonBond provides a streamlined and transparent application process. 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 offers support during economic hardship, including postponing payments

• Referral bonus of $200 for every friend you refer

• 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

Best Network of Lenders: LendKey

LendKey Student Loans
Pros: Offer interest rate reduction beyond auto-debit reduction Excellent customer service Return policy within 30 days you can return your loan

Cons: 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.

Other Options for Student Loan Refinance

iHelp
They provide clients with transparency and personal help. Soon they will issue Parent Plus loans for students' parents, too.

iHelp offers three repayment options while you're in school:

• Deferment
  
• Interest-only payments
  
• Standard interest/principal payments.

Purefy
This company is a great choice if you're married and want to combine loans with your spouse. Purefy also offers discounts on:

• Loans
  
• Personalized service
  
• Fixed and variable rates

Elfi
They offer 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
This company offers student loan refinancing backed by a bank. Citizens Bank 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
This company 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
This company is great for 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
This popular online bank 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
The bank'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
This company 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
The Education Refinance Loan requires 2 years of steady income or employment. It offers a 0.50% rate discount when you set up auto payments. Choose between a 10 or 15-year repayment term.

PenFed
They offer 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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Saving money is the best (and most popular reason) to refinance. If you can obtain a lower interest rate, you'll save thousands on interest over the life of the loan.

Here are some other reasons to refinance.

Simplify payments
Many borrowers refinance to make managing multiple student loans easier. When you bring several loans together, you'll only have one monthly payment to pay.

Pay off early
Most student loan refinances don't have a prepayment penalty. You can get ahead by paying your loans off early, which means paying less interest overall.

What Lenders are Looking For

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

Credit score
This 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, including 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

Consider these ideas when trying to get the best rates when refinancing student loans:

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

Apply to multiple lenders
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 on your credit report. Once a lender gives you a rate quote, you are under no obligation to take it.

Get a cosigner
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.

Is a Student Loan Refinance Right for You?

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Have you considered federal loan repayment options? Federal repayment plans or loan consolidation could be better choices.

Start by figuring out what you can afford. Consider your financial goals then decide if refinancing is the right choice. For example, if you are eligible for loan forgiveness, why refinance at all?

Before you refinance, ask yourself the following questions:

• Will a refinance shorten your 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.

  Check out How to Get Rid of Student Loans for more information.
  

• 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.

Other Options

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Before you jump in and refinance, make sure you exhaust your other options. Contact your loan servicer to learn more.

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. 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.

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.

  Consolidating is for federal loans only. It means lumping multiple loans into one. 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. 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 thousands in interest.

  It can also simplify your payments by grouping multiple loans into just one new loan with one monthly payment. But 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?
  None of the student loan refinance lenders on our list charge an application or origination fee. So it will not cost anything to apply and secure a loan. There are also no pre-payment fees, so it won't cost money to pay your loans 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 a 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 your student loan debt

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.