Refinance Your Student Loans

Is it worth it to refinance student loans?

Reputable lenders will warn you of the risks of refinancing federal loans even as they tout the benefits, and you should have stable personal finances and emergency savings before taking those risks. For those who qualify for a lower interest rate, student loan refinancing may help you accomplish one or more of these goals:

      ·Pay less interest over the life of the loan

      ·Pay off education debt faster

      ·Reduce monthly student loan payments

      ·Release a co-signer

      ·Refinance a parent loan in the child's name

What happens when you refinance student loans?

When you refinance student loans, a private lender pays off your existing loans and replaces them with one loan with a new interest rate and repayment schedule. Going forward, you’ll make monthly payments to the new lender.

What credit score do I need to refinance student loans?

You — or your co-signer— typically need credit scores that are at least in the high 600s. Many refinance lenders seek borrowers with scores in the mid-700s. The better your (or your co-signer’s) credit, the better the rate you’ll likely qualify for. Additionally, you need enough income to comfortably cover your expenses, student loan payments and and other debts.

Is it a good idea to refinance a student loan?

Refinancing is a good idea if you qualify for a lower rate and you’re comfortable giving up the benefits that come with federal student loans. When you refinance federal loans, you lose access to income-driven repayment plans, loan forgiveness programs and other federal loan perks.

Is refinancing student loans better than consolidation?

It depends on your situation and goals. If you have the credit and income requirements to qualify for a lower rate, refinancing can save you money and help you become debt-free faster.

If you consolidate your federal loans through the government, you won’t receive a lower interest rate, but you may qualify for loan forgiveness programs or income-driven repayment plans. Federal student loan consolidation won’t save you money. In fact, it may extend your loan repayment schedule, increasing the amount of interest you pay long term.

Which is the best lender to refinance with?

Most borrowers will want to go with the lowest interest rate they qualify for. But if rates are similar, look for lenders offering other features you value, such as the ability to refinance parent PLUS loans in the child’s name or flexible repayment options in case of an unexpected financial hardship.