Student Loan Refinance: Top 5 Lender Comparison

Young lady researching top lenders for student loan refinancing.
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How am I ever going to pay off my student loan debt? This question haunts me at least 5 out of 7 nights a week. 

Fortunately, paying off student loan debt doesn’t have to be so scary, thanks to student loan refinance lenders.

Since you’re reading this article, you’re probably having similar nightmares. And we’re not the only ones! As of 2022, the U.S. student loan debt stands at $1.748 trillion. Yes, that is trillion, with a T. 

But not to worry! You have options. 

In this article, I’ll go over what student loan refinancing is, give you advice for refinancing, and list the top lenders you should consider refinancing your student loan debt with. 

What is Student Loan Refinancing?

Student loan refinancing is when a person with existing student loans takes out a new loan with a private lender to get a better repayment plan. 

From that point on, you’re paying off your debt to the refinance lender. Think of it as trading in your old student loans for new ones with completely new terms. 

Why You Should Consider Refinancing Student Loans

You may be thinking, “I already have debt, so what difference does it make if I pay it off to the original lender or some private lender?” 

Refinancing is popular among graduates because it makes student loan debt more manageable.

How does student loan refinance do that? By giving you a lower interest rate and a lower monthly payment. 

This helps reduce the stressful burden that comes with paying off debt.

When you refinance loans, you also have the option to refinance multiple loans and lump them together. That way, you only have to worry about one payment per month.  

This streamlines the repayment process for you. 

How to Refinance Student Loans

Remember how confusing it was trying to figure out how to pay for college? Well, refinancing student loans doesn’t have to be like that!

Follow these easy steps for a pain-free process. 

1 – Find the Perfect Lender

At first glance, it might seem like all refinance lenders are the same. But doing your research upfront can help you avoid headaches in the future. 

Think about the situation you’re in. Think about what would help you most. What kind of interest rates are you looking for? How quickly do you want to repay your loan(s)? 

Find a lender that is willing to work with you. 

2 – Get a Few Estimates

Keep an open mind. Once you find a few potential lenders that fit your needs, ask for rate estimates. This also gives you time to compare your options. 

3 – Choose Your Terms

You’ve found a lender. Now what? 

Ask yourself these questions: 

  • Do I want a fixed or a variable interest rate? 
  • How long do I want my repayment period to be?

For example, you’ll want a fixed rate if you have a low income and need a payment that never goes up. 

On the other hand, a variable rate makes more sense if you want to pay off your loan before the rates increase. 

When it comes to the repayment period, a longer period will give you lower monthly payments, which is great for those with a limited budget. 

However, it’s best to pay off your loan as fast as possible because this will reduce the total amount you end up paying. 

4 – Complete Your Application

Before you can move forward with student loan refinancing, you’ll need to submit an application. 

The application will ask you to provide information about your current financial situation and loans.

You may also be asked to provide documentation of the following:

  • A government-issued ID
  • Proof of employment
  • Proof of graduation
  • Loan or payoff verification statements
  • Proof of residency

5 – It’s Time to Sign

Congratulations! Once you’re approved, all that’s left to do is sign the paperwork. Now, you’ve officially refinanced your student loans!

After you sign the final disclosure document, there will be a three-day grace period. This gives you the option to change your mind and cancel the new loan.

Best Student Loan Refinance Lenders

Refinancing student loans is an important decision. I want to help you pick the right lender for your situation. Here’s my list of the best student loan refinance lenders:

1 – SoFi – Best Overall

SoFi has proved itself to be a top loan refinance lender because of its low rates. Choose SoFi and save money! 

You can also enjoy perks such as:

  • Low fixed or variable rates
  • Flexible terms
  • No prepayment penalties
  • Financial advice and career coaching
  • No origination or application fees

In addition, SoFi offers a 0.25% auto-pay interest rate reduction. This means you get a discount when you let them deduct the monthly payments and interest from your account automatically.

The minimum loan amount you can apply for is $5,000. SoFi will conduct only a soft credit pull to check what terms and rates you qualify for. So you won’t have to worry about it showing up on your credit report. 

Keep in mind, the lowest interest rates are only available for applicants with a credit score of at least 650.

2 – Earnest – Best Flexible Repayment

Sometimes, all you need is a little bit of flexibility. That’s exactly what you get with Earnest! 

With Earnest, you can:

  • Pick your payment plan and loan terms
  • Consolidate multiple loans
  • Remove or add a co-signer
  • Get low interest rates

Their APR starts at 3.74% fixed and 2.49% variable, which is reasonable for student loan payments. These low rates enable you to pay off your student loans faster. 

Of course, your rate and eligibility will depend on a couple of factors such as a maximum debt-to-income ratio of 65% and a minimum credit score of 650. 

Once you get accepted, you’ll be able to choose between a monthly and a bi-weekly payment plan.

3 – LendKey – Best for Bad Credit

Bad credit is nothing to be ashamed of. Luckily, LendKey agrees! This is why it is the best option for those who want to take out loans on their own terms.

LendKey accepts people who have a minimum credit score of 660. Although they don’t accept the lowest of scores, their terms are more friendly to people in similar situations. 

You can choose between multiple payment options, which include fixed and variable rate loans. 

And if you’re worried about feeling rushed, don’t be! LendKey allows you to pay off your loans in a span of anywhere between 5 to 20 years.

With flexible options, no origination fees, and low rates, LendKey could be the solution for you!

4 – PenFed Credit Union – Best with Co-Signer

If you’re in a less-than-ideal financial position, consider finding someone who’s willing to cosign.

PenFed Credit Union is a great option if you have someone who’s willing to take this responsibility on with you.

The process of applying for a loan refinance is simple and easy. All you need to do is complete a short online application. 

You can refinance your federal or private student loans, and a co-signer can help you get a reasonable rate.

5 – Education Loan Finance – Best for High Balances

Education Loan Finance is a terrific option if you’re worried about how you’re going to pay off your high-balance loan. They provide reasonable rates and flexible terms.

Their rates start at 2.48% APR for variable loans and 3.99% APR for fixed loans. 

Education Loan Finance offers different refinancing options:

  • Loan amounts starting from $10,000
  • Student loan refinancing terms (5-20 years)
  • Parent loan refinancing terms (5-10 years)

Not only do they take care of large amounts, but they give you plenty of time to repay them as well. 

Commonly Asked Questions About Student Loan Refinance

Here are answers to common questions about student loan refinancing: 

Student Loan Refinance Rates

Across the United States, the average interest rate falls between 4.1% and 5.7%. You can use this as a reference, but the best way to know what your rate might be is to talk to a lender.

For example, with SoFi you can get a 3.99%-8.24% APR fixed rate and a 3.24%-8.24% variable rate. Both of these rates are valid if you use their autopay option.

Best Student Loan Refinance

The best student loan refinance lender and plan all depend on your needs and wants. The ones I mention in this guide all have something great to offer.

SoFi is top on our list because they offer amazing features! Those features include flexible terms, financial advice and career coaching, a 0.25% auto-pay interest rate reduction, as well as a minimum loan amount of $5,000.

How to Refinance a Student Loan

Do some research. Once you’ve chosen a lender, fill out an application, provide the needed documents, and sign the loan agreement. From there, all you have to do is make your monthly payments.

I recommend SoFi as the best overall lender, PenFed Credit Union if you need a cosigner, and Earnest for flexible repayment plans.

How to Refinance a Private Student Loan

The process of refinancing a student loan is almost always the same, even if it’s a private loan. To get approved, find the best lender for your situation, provide the required documents, and fill out a loan application.

What Types of Student Loans Can Be Refinanced?

You have the option to refinance both federal and private student loans. In some cases, you can combine them into a single loan and pay them off together, with a single payment plan.

Student Loan Consolidation vs. Student Loan Refinance

Student loan consolidation allows you to combine several federal loans to make one new federal loan. You cannot consolidate private student loans. 

The benefit to this is that it does allow you to qualify for government programs or make one single payment.

On the other hand, student loan refinancing is when a person who already has student loans transfers those loans to a new loan with a private lender. 

The benefit to refinancing is to get better repayment options.

Is Student Loan Refinancing Worth It?

If you qualify for a low-interest rate, getting a student loan refinanced is absolutely worth it. In the long run, you’ll save a lot of money.

Will Refinanced Student Loans Be Forgiven?

Unfortunately, since refinanced loans are from private lenders, they are not eligible for government student loan forgiveness programs. 

Does Refinancing Loans Hurt Credit?

Refinancing loans can actually increase your credit score because your total debt amount will decrease.

Can I Refinance My Student Loans with Bad Credit?

Yes. I recommend LendKey for people with bad credit. They accept people who have a minimum credit score of 660. 

In most cases, you or your co-signer need to have a credit score of at least 650 to 680 to qualify for student loan refinancing.

When Is the Best Time to Refinance Student Loans?

If you want to save as much money as possible, you should refinance your student loans as soon as you graduate.

How Many Times Can You Refinance Student Loans?

There is absolutely no limit on the number of times you can refinance your student loans.

*Disclaimer: All amount limits, offers, and APR values are subject to change.

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