Did you know…
…the average student will graduate college with over $30,000 in student loans.
And that is just for a bachelor’s degree!
If you are ambitious enough for graduate school, you will “earn” even more debt.
In fact, a graduate degree can land you in over six figures of debt.
And as if repaying the money you borrowed is not enough, you have to pay interest on that money.
The reality for most borrowers is that…
…their loans are costing them waaay more than they think!
The interest on the loan amount (i.e., principal) is a high cost by itself.
Unfortunately, there is no way to eliminate the cost of interest without paying off the principal balance of your loan.
But did you also know…
…there are tactics you can employ to reduce the cost of your loan?
One of these tactics involves refinancing your student loans.
That is right – you can save money by refinancing your student loans and get out of debt faster.
Refinancing your student loans can lower your interest rate and simplify your monthly payments.
Many borrowers want to refinance their student loans but have no clue where to start.
Does that sound like you?
If so, you are in the right place!
We are here to show you how you can save THOUSANDS OF DOLLARS by refinancing your student loans.
So, what are you waiting for?
Should You Refinance Your Student Loans
Refinancing student loans is not for everyone, but IT IS for many borrowers.
By refinancing your student loans, you may see a significant drop in your interest rate.
Since you have graduated from college, your credit score has likely improved, and you are bringing in more income.
Better credit scores and steady income are two ingredients to lower student loan interest rates.
Therefore, it is highly advisable for all student loan borrowers to at least explore a refinancing scenario.
The process is risk-free because you will receive rates for free, and with no impact to your credit score.
Here are a few things to keep in mind when refinancing your student loans…
- Federal student loans often include benefits that are forfeited when refinancing
- Federal student loans are refinanced through the Federal Direct Consolidation Loan Program
- Private student loans are refinanced through private lenders (i.e., bank or credit union)
- Federal and private student loans can be combined, but this must be done through a private lending institution
Federal student loan benefits include things like loan forgiveness and economic hardship programs.
Refinancing is an excellent solution for those with high-interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans.
To put it simply, you should refinance your student loans if you…
- Can save money by lowering your interest rate. Use a student loan debt calculator to see how much you can save.
- Are financially stable with employment. Remember, you will lose benefits like economic hardship programs on student loans.
- Can qualify for refinancing. You (or your cosigner) need a credit score in the high 600s.
- Are looking to eliminate your debt. You can do this by choosing a plan that works for you.
You need to know that refinancing will accomplish one (or more) of the above.
Keep reading to see if refinancing can benefit you.
How to Refinance Your Student Loans in 6 Steps
If you are lost when it comes to refinancing your student loans…
…this section will help you find your way (in under 5 minutes!).
Step 1: Determine your student loan refinancing goals
As previously mentioned, borrowers refinance for many reasons.
You can reduce your monthly payment, pay off your loan faster, and much more.
Here are your potential student loan refinancing goals:
- Lower monthly payments
- Pay off student loans faster
- Find a lower interest rate
- Remove a cosigner from student loans
- Receive a more flexible payment plan
- Consolidate multiple payments into one
Determining your goals is critical because that is how you will decide if refinancing will be beneficial.
Step 2: Use a student loan refinancing calculator
Refinancing your student loans can be intimidating.
A student loan calculator can be hugely beneficial in removing any uncertainty.
You may even have multiple student loans, which further complicates your decision.
For example, let’s say you have 3 loans: $5,000 at 5.2%, $15,000 at 6.3%, and $20,000 at 3.4%.
You receive a refinance offer of 4.5% for your total $40,000 balance.
How do you know whether you should refinance?
A student loan refinance calculator will show you if this is a good deal.
These calculators are intuitive and easy-to-understand.
Be sure to run the numbers before moving forward.
Step 3: Compare rates on multiple lenders
You wouldn’t buy the first car you see at the dealership, right?
Refinancing your student loans is no different.
You can “window shop” and view multiple offers with no obligation.
If the loan does not improve your current situation, simply move to the next option.
Who can refinance your student loans?
There are a variety of options, including:
- Online Lenders
- Credit Unions
You can check your rate on a lending marketplace (like Credible or LendingTree) or directly on the lender’s website.
The only thing you need to do is provide your information and check the rates.
What information do lenders need?
Most lenders require the following information:
- Total student loan debt
- Current income
- Monthly rent or mortgage payment
Different lenders may require slightly different information. Do not be alarmed if this is the case.
Additionally, you may be asked to create an account so you can save your information for later.
Once you provide your information, the lender will immediately run a “soft” pull of your credit.
Soft inquiries do not affect your credit score.
If your credit score and income meet the lender-specific eligibility requirements…
…you will receive your loan offers.
Receive Your Loan Offers
Typically, lenders offer loans with 5, 7, 10, 15, and 20-year repayment terms.
You can expect to receive variable and fixed interest rates.
- A variable interest rate changes with the market over the life of the loan.
- A fixed interest rate remains the same over the life of the loan.
Variable interest rates typically start lower but can increase over time.
If you plan to repay your loan quickly – you should choose the variable interest rate.
If you have a longer repayment term – you should choose the fixed interest rate.
And most importantly…
…be sure to compare lenders and determine which option is best for YOU.
Step 4: Pick a lender and choose your loan terms
Now that you have several outstanding offers…
…it is time to pick your lender!
Your decision should be easy – go with the lender that offers the most favorable terms.
Remember, you can use a student loan calculator to determine if your new loan will result in savings.
Additionally, you can compare loan terms to determine the length of your repayment term.
Keep in mind, a longer-term can lower your monthly payments.
However, you will pay more money (i.e., interest) over the life of the loan.
This is why the repayment term is important and truly depends on your financial circumstances.
- If you need more money in your pocket now, keep your payments low with a longer-term loan.
- If you can keep up with higher payments, save money with a shorter-term loan.
You should also consider customer service in your decision to refinance.
Check online reviews, Reddit, and other sources to see what people are saying about your prospective lender.
A lender that provides excellent customer service can be extremely important.
Don’t believe me?
You can read about common borrower complaints here.
Step 5: Prepare your documentation and complete the application
You need to submit an application to refinance your student loans and secure your new interest rate.
This is the hardest part of the process (but it’s really not that hard).
You will upload documents, including proof of income.
This is also the point where your lender will run a hard credit check.
Here is the primary information that most lenders will need:
- Proof of citizenship
- Valid ID number
- Proof of income
- Official statements for all federal and private loans
If you have a cosigner, your lender will need their information, too.
Do your best to provide all your documentation. Your lender will notify you if they need anything else.
You can also contact customer service if you have any questions.
Additionally, your current loan servicer can help you navigate your statements (i.e., original balance, date of disbursement, etc.).
Step 6: Continue paying your loans while you wait for approval
Once you submit your application, it goes through the lender’s review process.
The entire application process takes 2-4 weeks before you are fully accepted.
Until your application goes through, remember to keep paying your current loans.
Wait until you get the go-ahead from your new lender before you stop paying your current loans.
Make sure you do not have any remaining payments on your old loan.
When you start your new loan, do not forget to set-up auto-pay.
You can avoid missing payments, and most lenders offer an additional 0.25% discount on your rate for auto-pay.
At this point, you have successfully refinanced your loan and saved thousands of dollars!
Not bad, right?
The Top Student Loan Marketplaces
Now that you know how to refinance…
…here are our favorite resources to make refinancing painless.
You should start with marketplaces to find your best student loan refinancing option.
The best websites satisfy the following requirements:
- Provides accurate loan interest rates and fees
- Includes critical lenders to get the lowest rate
- Minimizes credit score impact
- Presents information so that it can be easily understood
- Provides sufficient contact information for each lender
Oh, and student loan marketplaces should be completely free.
These free marketplaces are beneficial for both lenders and borrowers.
Lenders pay to join these marketplaces and pay a commission when they get business.
Borrowers get the best loans and lenders bring in new business.
But there is no single marketplace that satisfies all these requirements completely.
However, the following websites used in conjunction with one another will give you what you need to find the best lender:
Let’s be clear – LendingTree is not a lender. Or a tree company.
LendingTree connects people like you with multiple lenders so you can get the best deal on loans.
Visit the LendingTree website and choose the loan you want (yes, they refinance student loans).
You can refinance both your federal student loans and private student loans through a private lender.
LendingTree has numerous lender that you can choose.
To get started with LendingTree, simply:
- Provide identification, pay stub, and a screenshot of your current student loans.
- Compare your student loan offers and rates.
- Apply for your student loan.
You can even estimate your savings with LendingTree’s student loan calculator.
In addition to finding your student loan…
…you can learn about your student loans with LendingTree.
The company has many student loan articles.
These articles answer questions like…
- Fixed vs. Variable Student Loans: Which are Better?
- Millennials: Pay Off Student Loans or Save for Retirement?
- How to Find the Best Student Loan Refinancing Companies
- How to Refinance Student Loans in 7 Steps
Take advantage of these resources because understanding your student loan is your first step to success!
Credible is a simple, transparent resource that allows you to receive and compare personalized offers in minutes.
The company allows borrowers to shop around for both student loan refinancing and private student loans.
Simply fill out a single form and receive multiple loans offers instantly.
Here is how Credible works:
- Select “Find My Rate” and fill out the short form (takes less than 2 minutes).
- Compare your student loan options.
- Apply for the student loan.
- Collect your bonus – up to $1,000!
Credible makes comparison shopping for student loans easy.
Like LendingTree, Credible has its own student loan calculator.
Credible offers learning resources and How-To guides, including:
- How To: Pay Off Student Loans
- How To: Lower Your Interest Rate
- Learn the Basics: Consolidation vs. Refinancing
- Learn the Basics: Repayment Plans
Lastly, Credible offers the Best Rate Guarantee.
The Best Rate Guarantee pays you $200 if you find a better interest rate elsewhere.
$200 and a better rate? We say challenge accepted.
The Top Student Loan Refinance Lenders
Once you have determined that refinancing will save you money…
…you can use these 3 companies to refinance your student loans.
These companies offer flexible terms, low rates, and even sign-up bonuses.
Be sure to utilize the services of at least LendingTree and Credible to compare your loan options.
From there, you can weigh the benefits of choosing LendKey, SoFi, or another lender to refinance your student loans.
Here are our favorite lenders:
LendKey – Earn up to a $750 bonus!
LendKey is transforming the $3.6 trillion consumer lending market.
The company enables 13,000+ community financial institutions to enter and succeed in online lending.
LendKey pools money from these financial institutions to offer low-cost student loans to borrowers.
You can obtain loans between $5,000 and $300,000, depending on your degree.
For example, an undergraduate degree is capped at $125,000.
You can also find loan terms of 5 – 20 years, rates as low as 1.97%, and no origination fees.
One important caveat is that LendKey does not offer to refinance for borrowers who did not graduate.
You can earn up to a $300 bonus for refinancing loans under $150,000 and up to $750 for loans over $150,000.
You can contact LendKey at 866-840-7406 with any questions.
SoFi – Earn up to a $200 bonus!
SoFi is one of the most well-known loan refinancing lenders.
You can find a wide variety of fixed and variable rate student loans with 5, 7, 10, 15, and 20-year repayment terms.
These loan terms enable you to pay as fast, or as slow, as you prefer.
Additionally, you can make extra payments on your student loans quickly.
SoFi offers great forbearance and deferment options in the event you need a break from your loans.
The company includes unemployment protection for borrowers and a career support program.
Other benefits of refinancing with SoFi include:
- Transparent underwriting criteria (understand why you received your specific loan options)
- Personalized estimates before applying (know your rate before applying)
- Flexible repayment policies (in addition-to forbearance and deferment)
Lastly, you can contact Sofi customer support for free consultations at (855) 456-7634.
Citizens Bank offers very good loan options and has a solid reputation.
Here are the main benefits of refinancing with Citizens:
- Loan repayment terms are available in 5, 10, 15, and 20-year options.
- The company offers fixed and variable rate loan options.
- You will pay no application, origination, or disbursement fees.
One unique benefit is that Citizens Bank offers a release program where your co-signer may be removed after you make 36 consecutive on-time payments.
Citizens requires a $10,000 minimum loan amount.
Are You Ready to Refinance?
If you are ready to refinance…
…be sure to start with LendingTree and Credible.
These two student loan marketplaces will find you the best rate on your new loan.
You can even earn a $200 bonus with Credible if you find a better rate on LendingTree.
You can also use the resources for student loan refinancing calculators and find a wealth of information on your student loans, in general.
When you are ready to refinance, keep LendKey and SoFi in mind because the lenders offer bonuses just for signing up.
For example, even if you find a better rate with another lender, you may be eligible for a $750 bonus with LendKey or $200 bonus with SoFi.
Need additional help with refinancing your student loans?
Leave your questions below, and we will answer them!