Student Loan Refinance

Student loan refinancing is the process of taking out a new private loan to pay off one or more existing student loans. When you refinance student loans, you work with a private lender to secure new loan terms, including a lower interest rate, a different repayment timeline, or a reduced monthly payment. This financial strategy can help borrowers save thousands of dollars over the life of their loans and simplify their repayment process. The refinancing process combines your existing federal loans, private loans, or both into a single new loan with terms based on your current financial profile. Unlike federal loan consolidation, which maintains your loans within the federal system, refinancing continually involves moving to a private lender. This distinction is crucial because refinancing federal loans means relinquishing federal protections, such as income-driven repayment plans and Public Service Loan Forgiveness.

When Should You Consider Student Loan Refinance?

The decision to refinance student loans depends on several factors unique to your financial situation. Generally, refinancing makes the most sense when you can secure a lower interest rate than your current loans carry. As of July 2025, average fixed APR ranges are 4.73% – 10.48%, while variable APR ranges are 5.51% – 10.61%.

Consider refinancing if you:

• Have improved your credit score significantly since taking out your original loans
• Have stable employment with consistent income
• Want to remove a cosigner from your existing loans
• Are paying high interest rates on private student loans
• Want to simplify multiple loan payments into one
• Can afford to lose federal loan protections in exchange for better rates

However, think carefully before refinancing if you:

• Work in public service and may qualify for PSLF
• Rely on income-driven repayment plans
• Have federal loans with relatively low interest rates
• May need forbearance or deferment options in the future
• Don’t have stable employment or sufficient income

Best Student Loan Refinance Lenders for 2025

Several organizations offer refinancing options for student loans. Here are a few select ones that stand out for various reasons, explained in detail:

SoFi Student Loan Refinancing

Overview: SoFi is recognized as one of the best options for good students, offering comprehensive member benefits beyond just loan refinancing. As the pioneer of student loan refinancing since 2012, SoFi has established itself as a market leader with competitive rates and unique perks.

Key Highlights:

• Fixed rates: 4.99% – 9.99% APR with autopay discount
• Variable rates: 5.88% – 9.99% APR with autopay
• Loan amounts: $5,000 up to total balance
• Terms: 5, 7, 10, 15, or 20 years
• Minimum credit score: 650

Pros:

• Extensive member benefits, including financial coaching and career counseling
• No application, origination, or late fees
• SmartStart option with 9 months of reduced payments
• Available for associate degree holders
• Special residency programs for medical professionals
• Unemployment protection allows a payment pause during job loss

Cons:

• Bar exam loans aren’t eligible for refinancing
• Higher minimum credit score than some competitors
• Member benefits require an active loan status

Earnest Student Loan Refinancing

Overview: Earnest is highlighted as the best option for borrowers with lower credit scores, offering unique customization options through their Precision Pricing tool.

Key Highlights:

• Fixed APR range from 4.60% APR to 10.24% APR (4.35% – 9.99% with a .25% auto pay discount)
• Variable APR range from 6.13% APR to 10.24% APR (5.88% – 9.99% with a .25% auto pay discount)
• Loan amounts: $5,000 to $500,000
• Customizable terms: 5 to 20 years
• Minimum credit score: 665 (650 for cosigners)

Pros:

• Precision Pricing allows custom payment amounts and terms
• Skip one payment annually without penalties
• Biweekly autopay option available
• No fees whatsoever (origination, application, or late)
• In-school refinancing for final semester students
• 24-month interest-only payment option during hardship

Cons:

• No cosigner release option
• Not available in all states
• Requires higher income verification

Citizens Bank Student Loan Refinancing

Overview: Citizens Bank stands out for offering the best discounts, including loyalty and automatic payment discounts that can reduce your APR by 0.5 percentage points.

Key Highlights:

• 3.24% to 14.99% APR with autopay discount for various loan types
• Loan amounts: $10,000 minimum
• Terms: 5, 7, 10, 15, or 20 years
• Multiple discount opportunities

Pros:

• Loyalty discount for existing customers
• Borrowers can skip one payment a year without penalties
• Education refinance loans for parents
• Cosigner release after 36 consecutive on-time payments
• Multi-year approval feature for returning students

Cons:

• Higher minimum loan amount ($10,000)
• Strict credit requirements
• Limited forbearance options
• Case-by-case hardship decisions

ELFI Student Loan Refinancing

Overview: ELFI is recognized as the best option for parent loans, allowing parents to transfer PLUS loans to their children.

Key Highlights:

• Fixed rates: 4.88% to 8.44% APR
• Loan amounts: $10,000 minimum
• Terms: 5, 7, 10, 12, 15, or 20 years for students; 5 or 10 years for parents
• Minimum credit score: 680
• Minimum income: $35,000

Pros:

• Parents can transfer loans to students
• Dedicated student loan advisor for each customer
• 4.9 out of 5 stars on Trustpilot with 2,200+ reviews
• No application or origination fees
• Lower maximum rates than many competitors

Cons:

• No rate discounts available
• No cosigner release option
• Limited-term options for parent loans
• Higher starting rates than some competitors

Laurel Road Student Loan Refinancing

Overview: Laurel Road specializes in refinancing medical school loans and loans for healthcare professionals.

Key Highlights:

• Fixed rates: 4.74% – 8.65% APR with autopay
• Variable rates: 5.51% – 8.89% APR with autopay
• Loan amounts: $5,000 to total balance
• Terms: 5, 7, 10, 15, or 20 years
• Special programs for medical residents

Pros:

• $100/month payments during medical residency (up to 4 years)
• Rate discounts for healthcare professionals
• Partnership discounts with professional associations
• Parent PLUS loan transfer options
• Associate degree refinancing for health fields

Cons:

• Best rates require opening a bank account
• Limited options for non-healthcare associate degrees
• Late fees up to $28
• Healthcare focus may not benefit all borrowers

LendKey Student Loan Refinancing

Overview: LendKey is the best choice for those seeking offers from community banks and credit unions.

Key Highlights:

• Fixed rates: 4.54% – 9.09% APR with autopay
• Loan amounts: $5,000 – $250,000 (graduate debt)
• Terms: 5, 7, 10, 15, or 20 years
• Network of 300+ community lenders

Pros:

• Access to local credit union rates
• LendKey services all loans regardless of lender
• Associate degrees eligible
• Competitive rates from smaller institutions
• Single application for multiple offers

Cons:

• Cannot refinance parent PLUS loans
• No ability to choose specific lender
• May require credit union membership
• Cannot browse offers before applying
• Limited transparency on individual lender requirements

RISLA Student Loan Refinancing

Overview: RISLA offers some of the lowest fixed rates starting at 4%, with exceptional borrower protections.

Key Highlights:

• Fixed rates only: 3.99% – 8.04% APR with autopay
• Loan amounts: $7,500 to $250,000
• Terms: 5, 10, or 15 years
• Minimum income: $40,000
• Income-based repayment option available

Pros:

• Industry-leading borrower protections
• Income-based payments capped at 15% of discretionary income
• Loan forgiveness after 25 years on IBR plan
• Economic hardship forbearance available
• In-school refinancing options
• No fees of any kind

Cons:

• Only offers fixed-rate loans
• Maximum term is 15 years
• Limited term options (only 3)
• Not available in all states
• No variable rate options for those preferring them

Splash Financial Student Loan Refinancing

Overview: Splash Financial offers competitive rates on both variable and fixed options with a minimum loan amount of $5,000.

Key Highlights:

• Partners with multiple lenders for best rates
• Loan amounts: Starting at $5,000
• Multiple term options available
• Serves as a marketplace for loan comparison

Pros:

• Compare multiple lenders at once
• Soft credit check for rate quotes
• Medical resident programs available
• No fees to use the platform
• Access to exclusive lender partnerships

Cons:

• Not a direct lender
• Limited control over lender selection
• May receive multiple communications from lenders
• Varying requirements by partner lender

How to Refinance Student Loans: Step-by-Step Guide

Refinancing your student loan can be a daunting task if you are unfamiliar with the terminology and steps involved. Here is a flow of tasks you can undertake to ensure you successfully get your loan refinanced and get a good deal:

Step 1: Evaluate Your Current Loans

Before beginning the refinancing process, gather all information about your existing loans. Document your current interest rates, monthly payments, remaining balances, and whether loans are federal or private. This baseline information helps you determine if refinancing offers genuine savings.

Step 2: Check Your Credit Score

Most refinance lenders require a minimum credit score of 650-680. Check your credit report for errors and understand your current credit standing. If your score is below 650, consider improving it before applying or finding a creditworthy cosigner.

Step 3: Calculate Your Debt-to-Income Ratio

Lenders typically prefer a debt-to-income ratio of less than 50%. Calculate yours by dividing your monthly debt payments by your gross monthly income. Include all debts: credit cards, car loans, mortgage, and current student loans.

Step 4: Shop Around for Rates

Use prequalification tools from multiple lenders to compare rates without affecting your credit score. Many lenders offer fixed-rate APRs from 3.99% to 10.3% with no impact on your credit score during prequalification. Compare at least three to five lenders to ensure you’re getting the best deal.

Step 5: Choose Your Loan Terms

Decide between fixed and variable rates, and select your repayment term. Shorter terms (5-7 years) typically offer lower rates but higher monthly payments. Longer terms (15-20 years) reduce monthly payments but increase total interest paid.

Step 6: Submit Your Application

Once you’ve selected a lender, complete the formal application. You’ll need:

• Government-issued ID
• Proof of income (pay stubs, tax returns)
• Proof of graduation or enrollment
• Current loan statements
• Employment verification

Step 7: Review and Sign Documents

Carefully review your loan agreement, paying attention to:

• Interest rate and whether it’s fixed or variable
• Repayment term
• Monthly payment amount
• Any fees or penalties
• Forbearance and deferment policies
• Cosigner release requirements (if applicable)

Step 8: Continue Current Payments

Keep making payments on your existing loans until you receive confirmation that they’ve been paid off. Missing payments during the transition can harm your credit and result in late fees.

Federal vs. Private Student Loan Refinancing

Federal student loans differ from private student loans. Here is a breakdown of the two and how to refinance each of them:

Refinancing Federal Student Loans

When you refinance federal student loans, you permanently convert them to private loans. This means losing access to:

• Income-Driven Repayment Plans: IBR, PAYE, REPAYE, and ICR plans that base payments on income
• Public Service Loan Forgiveness (PSLF): Forgiveness after 120 qualifying payments for eligible public service workers
• Federal Forbearance and Deferment: More generous pause options than private lenders offer
• Interest Subsidies: Government payment of interest during certain deferment periods
• Discharge Options: Death and disability discharge protections
• Loan Forgiveness Programs: Teacher loan forgiveness and other federal programs

Consider keeping federal loans if you:

• Work in public service or non-profit sectors
• Have inconsistent income
• May return to school
• Want maximum flexibility in repayment options

Refinancing Private Student Loans

Refinancing private loans carries fewer downsides since you’re not giving up federal protections. Benefits include:

• Lower Interest Rates: Especially if your credit has improved
• Better Terms: More favorable repayment options
• Consolidation: Combine multiple private loans
• Cosigner Release: Remove cosigner from original loans
• Different Servicer: Switch to a lender with better customer service

There’s typically no downside to refinancing private loans if you qualify for better terms.

Understanding Interest Rates and Terms

The interest paid on a loan is the most crucial factor in determining whether to refinance an existing loan.

Fixed vs. Variable Rates

Fixed Rates:

• Rate remains constant throughout loan term
• Predictable monthly payments
• Protection against rate increases
• Currently averaging 4.73% – 10.48% APR
• Best for borrowers who value stability

Variable Rates:

• Rate fluctuates with market conditions
• Often start lower than fixed rates
• Currently averaging 5.51% – 10.61% APR
• Can increase or decrease over time
• Best for borrowers planning quick repayment

Factors Affecting Your Rate

Your refinance rate depends on:

• Credit Score: Higher scores qualify for lower rates
• Income: Stable, sufficient income reduces lender risk
• Debt-to-Income Ratio: Lower ratios indicate better repayment ability
• Degree Type: Graduate degrees often qualify for better rates
• Loan Amount: Larger loans may have different rate structures
• Repayment Term: Shorter terms typically offer lower rates
• Cosigner: Adding a creditworthy cosigner can lower rates

Repayment Terms

Most lenders offer terms of 5, 7, 10, 15, or 20 years. Consider:

Shorter Terms (5-7 years):

• Lower interest rates
• Less total interest paid
• Higher monthly payments
• Faster debt freedom

Longer Terms (15-20 years):

• Lower monthly payments
• More total interest paid
• Greater monthly cash flow
• Extended debt obligation

Special Refinancing Programs

In addition to standard refinancing options, special refinancing programs are also available to eligible students.

Medical and Healthcare Professional Programs

Many lenders offer specialized programs for healthcare workers:

• Residency/Fellowship Programs: Reduced payments ($100/month) during training
• Physician Loans: Higher loan limits for medical school debt
• Professional Discounts: Rate reductions for nurses, dentists, pharmacists
• Extended Forbearance: Longer pause options during residency

Parent PLUS Loan Refinancing

Options for Parent PLUS loans:

• Parent Refinancing: Parents keep loan in their name with better terms
• Student Transfer: Some lenders allow transfer to the student (child)
• Consolidation: Combine multiple PLUS loans
• Rate Reduction: Often significant savings over 7.54% PLUS rate

In-School Refinancing

Select lenders offer refinancing while still enrolled:

• Available during final year or semester
• Immediate rate reduction on existing loans
• Deferred payments until after graduation
• Build credit history before entering repayment

Financial Hardship and Forbearance Options

Private lenders offer varying hardship programs:

Forbearance

• Temporary pause on payments
• Interest typically continues accruing
• Usually 3-12 months total
• May require documentation of hardship

Interest-Only Payments

• Pay only interest portion temporarily
• Prevents balance growth
• Maintains good standing
• Usually 6-24 months maximum

Modified Payment Plans

• Temporary payment reduction
• Extended term options
• Graduated payment schedules
• Income-based alternatives (select lenders)

Unemployment Protection

• Payment pause during job loss
• Usually 3-6 months at a time
• May have lifetime limits
• Some lenders offer job placement assistance

Common Refinancing Mistakes to Avoid

Quite often, students make mistakes while taking out a loan or opting for refinancing their existing loan(s). Here are some of the 

1. Refinancing Federal Loans Without Understanding Consequences: Don’t refinance federal loans without fully understanding the protections you’re giving up.
   
2. Not Shopping Around: Rates vary significantly between lenders. Always compare multiple offers.
   
3. Ignoring the Total Cost: A lower monthly payment might mean paying more interest over time.
   
4. Choosing Variable Rates Without Planning: Variable rates can increase substantially. Have a plan if rates rise.
   
5. Refinancing Too Often: Each refinance requires a hard credit check. Be strategic about timing.
   
6. Not Reading Fine Print: Understand all fees, penalties, and policies before signing.
   
7. Forgetting About Autopay Discounts: Most lenders offer a 0.25% rate reduction for automatic payments.
   
8. Refinancing Without Stable Income: Ensure job security before giving up federal protections.

Refinancing With a Cosigner

In some cases, the lender may ask for a cosigner. If so, here is what you need to know about cosigners:

When You Need a Cosigner

• Credit score below lender minimums
• Insufficient income
• High debt-to-income ratio
• Limited credit history
• Recent graduation without established credit

Cosigner Requirements

• Excellent credit (typically 700+)
• Stable, sufficient income
• Low debt-to-income ratio
• U.S. citizen or permanent resident
• Willing to accept legal responsibility

Cosigner Release

Many lenders offer cosigner release after:

• 12-48 consecutive on-time payments
• Meeting credit requirements independently
• Demonstrating sufficient income
• Formal release application approval

Not all lenders offer cosigner release; verify this before applying.

Tax Implications of Refinancing

Loans can have tax implications, which can adversely affect planning and savings. Here are some pointers on tax:

Student Loan Interest Deduction

• Still available after refinancing
• Maximum $2,500 deduction annually
• Income phase-outs apply
• Must have qualifying education expenses
• Applies to private and refinanced loans

Loan Forgiveness Tax Considerations</h3>

• Federal forgiveness is often tax-free
• Private forgiveness may be taxable income
• State taxes vary by location
• Consult a tax professional for a specific situation

Current Market Trends and Rates

The student loan refinance market in 2025 reflects recent decisions by the Federal Reserve. While the Fed has maintained rates recently, the refinancing market remains competitive. Current headline interest rates hover around 5% with most top lenders.

What’s Driving Current Rates

• Federal Reserve monetary policy
• Lender competition for qualified borrowers
• Economic uncertainty and inflation concerns
• Changes to federal loan programs
• Increased demand for refinancing

Future Rate Predictions

Experts suggest rates may:

• Remain stable through 2025
• Potentially decrease if the Fed cuts rates
• Vary based on economic conditions
• Continue offering savings over older loans

Frequently Asked Questions About Student

Loan Refinancing

How to refinance student loans?

To refinance student loans, follow these steps: First, check your credit score and gather information about your current loans. Next, compare rates from multiple lenders using prequalification tools that won’t impact your credit. Choose your preferred lender and loan terms (fixed vs. variable rate, repayment period). Submit a formal application with required documents, including proof of income, loan statements, and identification. Once approved, review and sign the loan agreement. The new lender will pay off your existing loans directly. Continue making payments on your old loans until you receive confirmation they’re paid off to avoid late fees or credit damage.

Can you refinance student loans?

Yes, you can refinance both federal and private student loans through private lenders. However, eligibility depends on several factors, including your credit score (typically a score of 650 or higher is required), income level, debt-to-income ratio, and employment status. Federal loans can be refinanced, but you’ll lose federal protections like income-driven repayment plans and forgiveness programs. Private loans can be refinanced without losing benefits, making them ideal candidates for refinancing. Some borrowers may need a cosigner if they don’t meet credit or income requirements independently.

Should I refinance my student loans?

Whether you should refinance depends on your specific situation. Consider refinancing if you have high-interest private loans, your credit score has improved significantly since you originally borrowed, you have stable employment and income, you can secure a lower interest rate, or you want to remove a cosigner. Don’t refinance federal loans if: you work in public service and may qualify for PSLF, you rely on income-driven repayment plans, you may need federal forbearance options, or your federal rates are already low. For private loans, refinancing makes sense if you qualify for better terms.

How can you refinance student loans?

You can refinance student loans by applying with private lenders online. Start by checking your eligibility through prequalification tools that perform soft credit checks. Compare offers from multiple lenders, including traditional banks, credit unions, and online lenders. Most applications require proof of graduation (or current enrollment), income verification, current loan information, and identification. The process typically takes 2-4 weeks from application to disbursement. Many lenders offer rate discounts for customers who use autopay, those with existing accounts, or those affiliated with professional associations.

How to refinance private student loans?

Refinancing private student loans is straightforward since you’re not losing federal benefits. Check your current interest rates and loan terms. Shop around with multiple private lenders to find better rates, focusing on those that specialize in student loan refinancing. Compare both fixed-rate and variable-rate options. Submit applications to your top choices (multiple applications within 14-30 days typically count as one credit inquiry). Select the best offer based on rate, terms, and lender benefits. The new lender pays off your existing private loans directly. There’s typically no downside to refinancing private loans if you qualify for better terms.

What happens when you refinance a student loan?

When you refinance a student loan, your new lender pays off your existing loan(s) and issues you a new loan with different terms. You’ll have a new interest rate (potentially lower), a new repayment term, a new monthly payment amount, and a new loan servicer. For federal loans, this means permanently converting to a private loan and losing federal benefits, such as IDR plans, PSLF eligibility, and federal forbearance options. Your credit report will show the old loans as paid in full and the new loan as a new account. Payment history from old loans remains on your credit report.

Can you refinance federal student loans?

Yes, you can refinance federal student loans through private lenders; however, doing so converts them permanently into private loans. This means losing all federal protections, including income-driven repayment plans (IDR, PAYE, REPAYE), Public Service Loan Forgiveness, federal forbearance and deferment options, interest subsidies, and death/disability discharge protections. Federal rates for graduate loans and PLUS loans are 7.94% and 8.94%, respectively, so refinancing might offer savings; however, carefully weigh the tradeoffs. You cannot convert private loans back to federal loans.

How long does it take to refinance student loans?

The refinancing process typically takes 2-4 weeks from application to final disbursement. Prequalification takes minutes online. The formal application process takes 15-30 minutes. Lenders usually provide initial decisions within 1-3 business days. Document verification and underwriting take 5-10 business days. Final approval and loan documents arrive within 1-2 weeks. Disbursement of funds to pay off existing loans typically takes 3-10 business days. Continue making regular payments on existing loans until you receive confirmation they’re paid off.

Can you refinance student loans more than once?

Yes, you can refinance student loans multiple times with no legal limits. However, each refinance application triggers a hard credit inquiry, which can temporarily lower your credit score. Consider refinancing again if rates have dropped significantly, your credit score has improved substantially, your income has increased considerably, or you want different loan terms. Wait at least 6-12 months between refinancing to build a positive payment history. Always calculate whether the savings justify another credit check.

What credit score do you need to refinance student loans?

Most lenders require a minimum credit score of 650-680 to refinance student loans, though requirements vary by lender. The typical credit score of approved borrowers is 748. For the best rates, aim for a score of 720 or higher. If your score is below 650, you’ll likely need a cosigner with excellent credit (700+). Some lenders consider factors beyond credit scores, including education, income, and savings. Variable rates may have lower credit requirements than fixed rates.

Is student loan refinancing worth it?

Student loan refinancing is worth it if you can secure a meaningfully lower interest rate (typically 1% or more reduction), have stable income and good credit, are refinancing high-interest private loans, want to remove a cosigner, or need to simplify multiple loan payments. It’s not worth it if you’ll lose valuable federal protections you need, the rate reduction is minimal (less than 0.5%), you’re close to loan forgiveness eligibility, you already have very low federal interest rates, or you lack stable employment. Calculate your potential savings using a refinancing calculator before making a decision.

Can you refinance Parent PLUS loans?

Yes, Parent PLUS loans can be refinanced through private lenders. Parents can refinance in their own name for better terms (PLUS loans currently at 8.94% APR). Some lenders, such as ELFI, allow parents to transfer the loan to their child through refinancing, provided the child meets the credit and income requirements independently. Refinancing Parent PLUS loans often provides significant savings but means losing federal protections. Parents cannot transfer PLUS loans to students through federal consolidation – only through private refinancing with select lenders.

Conclusion

Student loan refinancing can be a powerful financial tool for the right borrower. With careful consideration of your current loans, financial situation, and future goals, you can save thousands of dollars and achieve debt freedom faster. The key is understanding what you’re giving up (especially with federal loans) and ensuring the benefits outweigh any lost protections.

Take the time to research lenders, compare multiple offers thoroughly, and carefully read all terms. Whether you’re looking to lower your monthly payment, reduce your interest rate, or simplify your loans, refinancing offers options worth exploring. Remember that the best time to refinance is when you can qualify for meaningfully better terms that align with your financial objectives.

Start by checking your credit score, calculating potential savings, and getting prequalified rates from multiple lenders. With the right approach, refinancing your student loans can be a significant step toward improved financial health and faster debt elimination.