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Explore Student Loan Refinancing Options

Your student loan debt doesn’t have to keep you from living your life. When your student debt affects your retirement, keeps you from starting a family, or stops you from reaching for your dreams, it’s time to explore your options. If you’ve got a solid credit and income situation right now, student loan refinancing could be just what you need.

What Can Student Loan Refinancing Do for You?

When your student loans are refinanced, a private lender (like a bank, credit union, or online lender) pays off your total loan balance and replaces it with one loan with a new interest rate and repayment plan. You’ll then make one monthly loan payment to the lender who refinanced your student loans.

Refinancing can possibly:

Unlike student loan consolidation, you can refinance your student loans as many times as you want. Obviously, you’ll only want to refinance your loans when you can get a better interest rate, but it’s not a one-time-opportunity situation.

While most borrowers don’t even consider refinancing, an estimated 2 million are eligible to refinance their student loans. You could easily be one of those two million borrowers and not even know it. Knowing the option exists for you, even if you don’t pursue it, is important.

Refinancing Considerations

You may investigate refinancing if you want to adjust your monthly payments or pay off debt sooner with lower interest. When you decide to refinance a federal or private loan, the new lender will look at your situation and consider criteria such as:

Lenders will need to perform a soft credit pull to check your quoted rate, but this shouldn’t affect your credit score. However, once you complete your formal loan application, the lender will do a hard credit check to confirm the quoted rate.

If you don’t have a steady income or a good credit history, you won’t be able to qualify for the lowest fixed and variable rates offered by lenders. Refinancing your education loans is typically not worth it if you aren’t getting a better interest rate than you already have.

And if you’re refinancing both federal and private student loans, you may be losing any benefits associated with the federal loans, like repayment options and student loan forgiveness opportunities.

Choosing a Lender

Don’t be fooled by shady student loan refinancing offers without doing your research. Most companies will refer you to their lending partners for a fee, even if it’s not the best one for you. But that doesn’t mean you should write off all lenders – many are offering new and improved options for student loan borrowers.

You’ll want to check the rates of any lenders offering you refinancing and compare to ensure you’re getting the best fixed interest rate available to you. Look through their terms carefully to be sure you agree with them.

Be sure to ask about any application or origination fees so you can get a clear picture of the cost of student loan refinancing. And ask about the length of repayment and any special repayment options that would be available to you (like payment plans or deferment and forbearance).

Is Refinancing the Right Solution for You?

Refinancing isn’t always cut and dry. Like any financial decision, there are both risks and benefits to every decision. Our Student Loan Advisors know the pros and cons of what’s available to you, so you can make the best decision.
Have you already talked with a lender about your refinancing options?

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