Repayment Options

How to Refinance Student Loans

The average debt for graduating seniors rose from $9,450 in 1993 to $29,400 in 2012, and it has continued rising since. These numbers are taken from research done in 2014 by the Institute for College Access and Success. Student loans have grown so large, they have surpassed the debt of both credit cards and auto loans. In fact, only home mortgages are a greater debt category than student loans, according to an article by Forbes.

This is why many students look to refinance student loans to help make their debt pay-off more manageable.

This type of debt can feel crippling at times. A person has just graduated college, and they already feel like they are behind in life. The debt will begin to collect interest and add thousands to an already staggering number. Refinancing student loans helps to cut down on some of this debt, making it easier to pay off.

Top Three Companies

Here are three of the best companies to consider when refinancing student loans:


SoFi is one of the top companies when it comes to refinancing student loans. Their company handles more than just student loans. They are the one stop shop for all your financial needs. They cover things like loans, refinancing, investing, and saving. SoFi, and their team of expert advisors are ready to assist with all your needs.

They have refinanced over $18 billion in student loans over the lifetime of the company. Interestingly, there are over 250,000 members who have refinanced using SoFi. There is some comfort in numbers, knowing so many others have come away from their refinancing with only positive stories to tell.

What They Offer

SoFi offers some of the lowest rates. You have the option of choosing either fixed rates or variable rates. As of the time of publishing, their fixed rates range from 3.90% to 7.98%, while their variable rates range from 2.47% to 6.99%. Their terms available are 5, 7, 10, 15, and 20-year repayment plans.

There is no maximum amount for how much can be taken out in a loan. It will all be dependent on your credit score, income, and other factors considered during the application process.

The application process is very easy to complete. It can be done through an online form. There is 24/7 customer support ready at any time to help you with the application or help you afterward. You will only need a credit score of 650 or higher to be qualified.

The company is one of the most transparent options. There are no hidden fees or pre-payment penalties. Everything that is needed and all the costs are laid out up front and center for you to see from the start. You won’t have any unexpected surprises later. This way you can be confident that you truly are saving.


There are plenty of protection options in place. If you find yourself unemployed, they will allow you to pause your payments for up to three months as well as offer you support in finding a new job.

SoFi cares about your career. They offer career support for members to help them get started in their new careers after school. Those who enter into SoFi’s entrepreneur program can also receive additional loan deferrals as well as helpful mentorships.

How to Apply

Applying for SoFi is quick and easy. You can be pre-qualified in as little as 2 minutes. You do not need to even fill out the entire application before having an answer! This pre-qualification will not even send a hard inquiry, so your credit score will not be affected.

Once you are qualified, you can then select which rate and term best suits your situation. Once you are finished, everything can be signed electronically and uploaded.


You will need a credit score of at least 650 to qualify. You will also need a good and steady income to be accepted by SoFi. In order to qualify, you must be a graduate from a school with an undergraduate or graduate degree.

They will refinance both federal and private loans. If you do not qualify, they do allow for co-signers, but the co-signer will have to remain on the loan until it is fully paid off or refinanced by another organization with new agreements.

They require a minimum amount of $5,000 to be refinanced. You cannot have a loan period shorter than five years or greater than twenty years.

Repayment Options

SoFi has a few special repayment options available. For instance, you are allowed to pay more than the minimum requirements. This can help you to pay off your loan faster if you are doing well financially. You can also make biweekly payments instead of the regular monthly payments.

Deferment is also available with a SoFi loan. They will honor any current agreements, including grace periods already in place. Those who are at least part-time students, active duty service members, on disability rehabilitation, and those involved with SoFi’s entrepreneurship program are all eligible for deferment.

They also offer forbearance. In the case that you may lose a job, you can have up to three months of forbearance.

Things to Consider

SoFi tends to be stricter when it comes to requirements for refinancing student loans. One of the ways they can keep their loan rates so low is through their pickiness of who they accept, as they always know they are bringing in reliable borrowers. If you have a great credit score, income, and credit history, then SoFi would be the best option. If you struggle in any area, then you may want to have a secondary company as a back up who is a little more forgiving.

Co-signers are required to remain on the loan for the total duration of the loan. They are not able to be removed, as is the case for other lenders. This means that you will need to find a co-signer willing to make a long-term commitment.


Earnest is another option for the top organizations for refinancing your student loans, just under SoFi. They are trusted by thousands of clients to refinance loans and provide the lowest interest rates. They are also one of the most flexible lenders when it comes to repayment.

What They Offer

You can choose from both fixed rates and variable rates. Their rates range from 3.89% to 6.30% for a fixed rate and 2.47% to 6.30% for a variable rate (at time of publishing). You can receive up to a .25% discount when you enroll in their autopay. There are also no hidden fees. They are upfront about all their costs and rates.

If you are struggling to make your payments, they have other options available. You can request both deferment and forbearance if you qualify for their reasons, such as economic hardship. If you are doing really well financially and prepay your loans, you will not be penalized.

You are able to make biweekly payments. You can also be flexible with your month to month payments by customizing the rates by your income in order to save money.


You can know whether you are pre-qualified or not in just two minutes. There are a few standards for being eligible for a loan through Earnest. You must be a U.S. citizen or a permanent resident. You must also have a completed undergraduate or graduate degree. The exception would be if you will be graduating in the next six months.

You must also have current employment or proof of employment within six months of the start date of the loan. You are required to have a minimum income of $35,000 as well as a minimum credit score of 650. Your credit history must be at least 36 months old.

A minimum loan of $5,000 is required. You cannot have a loan larger than $500,000. You can choose a loan anywhere from 5 years to 20 years long.

Things to Consider

You must be eligible for the loan as co-signers are not allowed with Earnest. This will greatly reduce the number of people who are able to join Earnest as their income and credit score requirements are higher. They are picky because they are a very trustworthy company. As a result, they would like to only lend to people whom they can guarantee will remain in good standing in order to maintain the company’s current rates and benefits.

Earnest is not available in all states, so check where it services before applying. 


LendKey has a slightly different approach to refinancing student loans. Instead of you finding the best deal, LendKey is an organization that will do the legwork for you. They search through hundreds of credit unions as well as banks to bring you the very best deals and rates. You only have to deal with LendKey and go through them for refinancing student loans quickly and easily.

How LendKey Works

LendKey works by partnering you with the best non-profit banks and credit unions. They pick from hundreds of banks, both large and small, so that you only receive the best rate.

LendKey works with banks and credit unions by providing a loan service online, so that the banks and credit unions do not need to spend the time or money providing the service themselves. Instead, banks and credit unions can focus their resources elsewhere, resulting in savings which will reflect in the lower rates offered.

Note that LendKey has the possibility of the lowest rates out of all the lenders reviewed in this article.

Application Process

You can apply quickly and easily online through their site. LendKey has a very high approval rating as they are able to search for a bank or credit union willing to accept your specific credit and credit history.

They are able to quickly check your credit score and other key items to decide in just two minutes whether or not you are approved, without affecting your credit score with a hard inquiry.

You do not need to go through the application alone. There is a team of professionals ready to help you from start to finish to make sure you are receiving the best possible rates for your situation.


In order to be eligible, you will need to be either a graduate or undergraduate student. You will also need a minimum income of $24,000 a year as well as a minimum refinancing balance of $5,000. Your credit score should be at least 600. You will also need at least 36 months of credit history to be accepted.

They accept both private and federal loans. You also have the option of having a co-signer to help your eligibility.

Options Available

LendKey will finance both private and federal student loans. At the time of publishing, they offer rates from 2.51% to 8.09% with a variable loan and 3.49% to 8.82% with a fixed rate loan. If you opt for automatic payments, you can have as much as a .25% reduction in your interest. The repayment term options are 5, 7, 10, and 20 years.

LendKey also offers unemployment protection. If you find yourself without a job, you can pause your payments for up to 18 months while searching for a new job. They also offer the option of releasing a co-signer if there have been 12 on-time payments made.

There are no surprise payments with LendKey. They are very transparent in their dealings. You do not have any application fees or origination fees as well as prepayment penalties.

If you need lower payments to start out with, LendKey also offers a lower payment plan. For this plan, you can opt to only pay the interest for the first four years of a 15-year loan. This will allow you to keep the loan amount steady, while also not being overwhelmed by high monthly payments.

Things to Consider

While LendKey does offer some of the lowest rates and easiest qualifications when it comes to refinancing student loans, they are not a lender themselves. This means that the loan requirements will vary drastically from person to person. What rates you receive and additional options may even vary from state to state, depending on what is available in your specific area. If you would like the convenience of someone else finding the best deal, then LendKey will do a great job.

Not only does a large number of banks and credit unions affect what you receive, but it also affects how you apply. To receive some rates, you may be required to join a specific credit union or bank in order to qualify.

Understanding Student Loans

Before students can understand refinancing student loans, they need to first fully understand the loans themselves. Loans can be a complicated beast. They can help someone obtain a necessary education, but the exchange is years of payments.

In the U.S, students have borrowed a total of over $1.5 trillion dollars for schooling, according to an article in Forbes. In total, this amount is divided up between more than 44 million students, making an average of about $37,172 of debt per student in 2016 alone. Some degrees, such as medical and law, are more expensive than others, changing the statistic for each person.

The price of schooling continues to rise, making it impossible for many people to receive a degree with paying upfront. Getting a student loan is an investment in the future. It is borrowing money now, knowing that the money will help provide an education that will result in better jobs. These better jobs, in turn, will allow you to make the necessary money to pay off the loans as well as make a higher income than if you did not go to school. With this reasoning, many students find the thought of going thousands of dollars in debt worth the investment.

The money from loans is usually given in increments at the start of each semester. While in school, most students do not need to pay these loans. Once they graduate, the loan providers will inform the student of when they are required to begin payment. Some lenders require immediate payment, while others offer a grace period when the student has time to find a job in order to make the necessary money for the required payments.

Repayment Plans

Student loan repayment plans vary depending on the provider. The most common type of repayment plan is a fixed amount each month. This can be difficult for many students, as the fixed amount is usually a higher amount that many students are unable to pay with the income of a first job.

Another type of repayment plan is an income-based repayment plan. This plan takes into account how much you make, and guarantees that the monthly payment amount will always be affordable. The downside of this repayment plan is that this can prolong the student loan repayment, and result in higher interest. Income-based repayment is not for everyone. Some may not be eligible.

The last type is a gradient repayment plan. This plan will start with a lower monthly payment, then gradually increase each year until the entire loan is paid off. The pay off period is usually similar to the fixed-amount, and it is available for everyone. While it can benefit some to have the lower monthly payments at first, you need to keep in mind that the end payments will be even higher than the fixed plan payments in order to make up for the lower payments at the start.

Types of Student Loans

There are two main types of student loans, according to Loans can either be a private loan or a federal loan. Federal loans tend to be the more recommended type of loan. These types of loans usually come with better interest rates and higher rates of approval. Most financial organizations recommend federal loans over private loans.

Private loans tend to have higher interest rates and are more difficult to be approved for. They are very similar to taking out a regular loan for any other personal item. This means that they require a credit check and often times a cosigner, depending on the student’s credit history. Being more of a regular loan, they often times even require a student to start paying on them before the student even graduates.

A federal student loan is money borrowed from the government, essentially. The money can be borrowed as different types of federal loans. Most of the time, one single type of loan will not cover all the costs of schooling. This is why many students have to take out multiple loans from several categories of loans. Upon graduation, a student may easily have as many as ten different loan payments to make, each with their own interest rates.

Reasons to Refinance a Student Loan

Refinancing a student loan is, simply put, taking out a new loan in order to have better rates or change the loan terms. There are many benefits to refinancing, but there are also some downfalls to consider. Before looking at each, here is the basic rundown of refinancing student loans.

If a private student loan has been taken out, then refinancing can be the smarter way to go. As covered earlier, private student loans tend to have much higher interest rates and require a cosigner often times due to students not having a high enough paying job to quality on their own.

After graduation, if a student finds a well-paying job and has a better credit history, they can refinance that private loan. This means that a new loan contract will likely be drawn up. This contract may allow for the student to be able to be the sole holder of the loan, as well as have a lower interest rate as they are no longer a risky lender. Lower interest can save thousands in the long run.

Refinancing Federal Loans

Federal student loans are a little trickier. A federal student loan cannot be refinanced into another federal student loan. The government has consistent interest rates across the board for their loans. This means that there is no chance of lowering the rate with another federal loan.

A federal student loan can, however, be refinanced into a private loan if so desired. Federal loans often times have some of the best rates. If a private loan can be gotten at a lower interest rate, which does not happen all too often, then refinancing a federal loan into a private loan may be worth considering.

Another reason for refinancing student loans is to combine all your loans into one easy payment. This is called loan consolidation. Loan consolidation can be done without refinancing if desired. This simply keeps the current contract with similar interest rates but combines all your different student loans under one umbrella loan. When refinancing student loans, you are both combining the loans as well lowering the interest rates of your loans.

How to Refinance a Student Loan

Refinancing a loan involves mostly research to find the best rate. Once an agency has been found, then all that is left to do is send in an application through either the website or a visit to the financial institution. After that, all that is left to do is wait to be approved.

To receive the best rates, a credit score of 700 or higher is recommended. A stable income source is also necessary in order to receive a private loan, just as it is for any other type of loan or credit. A cosigner is an alternative for being eligible income-wise for a private loan.

Debt can be a huge factor when it comes to being approved for a private loan. If a student has too much unpaid debt, a financial institution will be less likely to see them as a reliable investment. Paying off as much outside debt as possible is a smart move before applying for refinancing on a student loan. Once the outside debt has been paid, it is important to keep a low debt to income ratio for higher approval odds.

Drawbacks to Refinancing a Student Loan

While there are many benefits to refinancing student loans, there are some things to consider that could hurt you in the end if you are not cautious. Refinancing student loans will create a brand new contract. This means that many of the protections that were in place before no longer apply.

Refinancing a Private Loan

Refinancing a private loan for a new private loan generally works towards your benefit. Private loans can usually have the same protections in place as previous private loans. These protections can include a grace period after graduation where you do not need to pay on the loans or special repayment options or loan forgiveness.

Be sure to carefully inquire about all the new contract details. Ask about what types of repayment plans are available with the new refinanced loan. Also, ask about what happens when a student cannot pay on the loans such as due to unemployment or other reasons. Private loans can be very strict about repayment.

Refinancing Federal Loans

Federal loans may not always work in your favor to refinance. While private loans may have better interest rates, they do not always have as good benefits as a federal loan does. Federal loans tend to have a grace period. They also have special protections in place in the case of unemployment or other financial difficulties.

Federal loans tend to be more willing to lower monthly payments for a time period. They may even allow you to stop the payments for a period of time altogether, such as if you return to school. All these benefits could be lost when the loans are transferred to a private loan for refinancing. While money can be saved, you have to weigh it against the benefits lost and the security in case of any unexpected situations that could affect your ability to pay on your loans.

Frequently Asked Questions

What type of credit score do I need to refinance my student loan?

The better the credit score, the better the loan. The best rates will usually be given to those with a credit score of 700 or higher. If you have a score between 650 to 680, you will have a good chance of being approved for an average interest rate. Anything below, and you are looking at higher interest rates. At that point, refinancing student loans may not be the best idea.

How many times can I refinance my student loan?

There is no limit to how many times student loans can be refinanced. You can continue refinancing student loans as your credit continues to grow in order to keep lowering your interest rates and save you money.

When refinancing student loans multiple times, keep in mind the effect of hard inquiries on your credit report. Hard inquiries do not have a major effect on your credit, but it still negatively changes your score. Too many inquiries do not look good to lenders and can hurt your chances of approval in the future.

When can I refinance my student loan?

You can refinance your student loans anytime. The sooner you refinance your loans, the sooner you can start saving from the new loan contract and lesser rates. While the loans can be refinanced as early as right after graduation, being approved at this time will be difficult as most recent graduates do not always have a secure job that will help with their approval odds.

You cannot refinance your loans while you are still in school. You will need to at least be graduated before loans can be refinanced. Also, be sure the loans are in good standing. Loans that are in default, or have some other hold, cannot be refinanced.

What is a fixed-rate and variable-rate loan?

When you look at refinancing student loans, you will come across two terms. These are fixed-rate and variable-rate loans. A fixed-rate is one of the more common loan types available. This means that a loan rate will be decided on at the start. This loan rate will remain the same for the length of the loan.

A variable-rate loan is more of a risk. They often times offer a lower rate at first, but you are not guaranteed to keep the same rate the entire length of the term. These loans will fluctuate according to the market. As stocks and bonds, as well as other financial holdings change, so do your rates, as they are based on the index mutual funds.

Taking out a variable-rate loan will only benefit you as long as the market does well and your loan stays lower. In a year or two, the market may change, causing your loan rate to peek. A fixed-rate loan may be a little higher, but you are guaranteed that rate for the entire life of the loan.

What should I do if I am rejected?

Being rejected can be discouraging, but do not lose hope. The first thing that should be done after a rejection letter is to check for a reason. If a reason is listed, then you know what needs to be done in order to be approved. If a reason is not given, then it is time to check your credit report.

First, check your credit score. Make sure it is in good standing. If it is not, check for negative factors and try to find solutions to fix the negative factors and improve your score. Second, check your debt. Try to keep your debt below 30 percent of your credit limit. This includes all credit cards. Compare your debt to your income. Paying off debt may be necessary before reapplying for refinancing.

Rest assured in the knowledge that there are many options out there. If one company has rejected your application, then send out other applications. Not every company has the same standard.

If you still cannot find a company that will accept your application, then try reapplying with a cosigner. Cosigners can help vouch for your financial integrity and increase your odds of approval, even with negative factors on your credit report.

In Conclusion

Whether you just graduated college, or have been paying on your student loans for years, it is always time to consider refinancing your student loans. Refinancing student loans is a big decision and should not be entered in lightly. If, after doing research on your own, you still think this is the right step, then it is time to begin sending out those applications.

If you’d like to learn more about financial aid, scholarships, and student loans, check out LendEdu’s Student Loans 101 course.

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