Refinance student loans

Ultimate Student Loan Refinancing FAQ

student loan refinancing faq

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Welcome to the Student Loan Refinancing FAQ, where you can get answers to all your burning student loan refinancing questions!

Ready to dive in? Let’s go.

What is student loan refinancing?

Student loan refinancing is the process of paying off one or more of your student loans with a new loan from a private lender, such as a bank or online lender.

You can refinance one or more loans for a new (hopefully lower) interest and new repayment terms. If you refinance multiple loans, you combine them into one single loan.

Borrowers typically refinance student loans to save money on interest, adjust their monthly payments, and choose a new repayment term.

What are the benefits?

The main benefit of refinancing your student loans is getting a lower interest rate. Let’s say you owe $30,000 at an 8% rate. Over 10 years, you’d pay $15,958 in interest (ugh). But if you could lower that rate to 5% through refinancing, you’d pay $9,548 in interest, resulting in a savings of $6,410.

Another benefit of refinancing your student loans is the chance to choose new repayment terms. If you want to pay your loans off fast, you could go with a short term of five years or so. If your monthly payments are too burdensome, you could select a long term of 15 or 20 years.

Some borrowers also refinance multiple loans to simplify the repayment process. When you refinance two or more loans, you combine them into a single loan with one monthly payment, making repayment easier to track.

Finally, refinancing might mean switching to new lender and loan servicer with better customer service. If you’ve had bad experiences with your loan servicer, switching to a new one through refinancing could be a welcome relief.

What are the cons?

One con of refinancing federal student loans that you took out from the Department of Education (e.g., Direct loans, PLUS loans, or Parent PLUS loans) is that you turn them private. Private student loans are NOT eligible for federal forgiveness programs or repayment plans.

Don’t refinance your student loans with a private lender if you’re counting on federal benefits such as income-driven repayment, Public Service Loan Forgiveness, or any other federal offering.

Some private lenders offer deferment and forbearance, but they typically don’t allow income-driven repayment. So you lose some flexibility when you turn federal loans into private ones.

Another con is that not everyone will qualify to refinance student loans. In order to qualify, you need strong credit and a steady income (or a creditworthy cosigner). Only borrowers with strong credit will get the lowest rates.

If you’re not eligible now, you could take steps to build your credit and make yourself eligible in the future.

Who are the best refinancing providers?

There are a variety of banks, credit unions, and online lenders that offer student loan refinancing. Student Loan Gal put together a list of recommendations of lenders with the most competitive rates and flexible repayment terms. Plus, most of these lenders offer a special welcome bonus of $100 or $200 to Student Loan Gal readers!

Check out the full list here.


See the Full List


What are the eligibility requirements?

Most student loan refinancing providers look for the following:

  • A credit score of 650 or higher
  • A steady income or offer of employment
  • A degree from a Title IV school
  • Be a U.S. citizen, permanent resident, or visa holder
  • Be at least the age of majority in your state (typically 18)
  • Reside in an eligible state (some lenders only lend in certain states)

Some lenders also require that you refinance a minimum amount of student loans. The minimum amount to refinance with SoFi, for example, is $5,000.

If you can’t meet credit and income requirements, you could try applying with a cosigner who does. Your cosigner becomes just as responsible for the debt as you are.

Note that some lenders offer cosigner release after a year or two of on-time payments.

Will checking my rates hurt my credit?

No. Many lenders offer online quotes that allow you to check your rates instantly without a hard credit inquiry. This process is recommended, as it means you can compare offers from multiple lenders and try to find the lowest rates.

Some marketplaces, such as LendKey and Credible, let you check several offers at the same time. You’ll only get a hard credit check if and when you choose an offer and submit a full refinancing application.

Can I apply with a cosigner?

Yes, most refinancing providers accept a cosigner on your application. Your cosigner can help you qualify if your credit and income aren’t up to par. Adding them can also help you get better rates.

Note that a cosigner becomes equally responsible for the loan, and their credit could be damaged if you miss payments. Plus, cosigning a big loan could mean their debt-to-income ratio increases, potentially making it harder for them to qualify for a different loan.

Can I release my cosigner?

Some lenders offer cosigner release after a certain period of on-time payment. CommonBond, for example, allows borrowers to apply for cosigner release after 24 months of on-time payments.

Once your cosigner is released, they’ll no longer be responsible for your debt and the account should get marked as closed on their credit report.

Do I have to refinance all my loans?

No. The best approach is to refinance loans that will give you the biggest benefit. In most cases, it makes most sense to refinance high-interest loans for lower rates.

In fact, you can cherry-pick which loans you want to refinance, such as high-interest private ones, and leave other ones, such as low-interest federal ones, alone.

How long does it take to refinance?

Checking your rates online only takes a few minutes. It’s a good idea to shop around before choosing a deal to make sure you’ve found the best one.

Once you’ve submitted an application, the entire process only takes about two to three weeks.

Before you stop paying your old loan(s), make sure you’ve received confirmation that the account has been closed and that your new loan is up and running.

What should I do now?

First, pat yourself on the back for making it through this student loan refinancing FAQ and learning about the ins and outs of refinancing! If you want to learn more, head here to learn about the pros and cons of refinancing your student loans.

If you’re ready to check your rates, hop, shimmy, or dance your way to this page for the best banks to refinance student loans. You’ve got this!


Want better rates? Here are the best banks to refinance student loans:

Variable rates start at...Fixed rates start at...Repayment termsWelcome bonus Check your rates
refinance student loans4.54%4.49%5 - 20 years$200Visit LendKey
refinance student loans4.99%4.47%5 - 20 years$200Visit Earnest
refinance student loans4.22%3.97%5, 7, 10, 15, and 20 years$120Visit Laurel Road
refinance student loans4.53%4.40%5 - 20 years$100 or $200, depending on the amount you refinanceVisit Credible
refinance student loans5.09%4.74%5, 7, 10, 15, and 20 years$100Visit SoFi
refinance student loans4.53%4.83%5, 7, 10, 15, and 20 years$100Visit ELFI