7 Reasons to Refinance Student Loans Now

By Mentor Staff | Edited By Mentor Staff

Updated On March 26, 2022

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If you want to get a lower interest rate, a lower monthly student loan payment, or both, then student loan refinancing may be a good option for you. There are many reasons why you should refinance student loans. You can simply student loan repayment, save money, and get out of debt faster. Here’s what you need to know about student loan refinancing and how it can help you.

Top Picks For Student Loan Refinancing

May 2022

Variable APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Variable APR means that your interest rate can fluctuate over time, which can increase or decrease your monthly student loan payment. Typically, a variable-rate loan has a lower introductory rate than a fixed-loan rate loan. Variable APR includes a 0.25% discount when you enroll in autopay.
Fixed APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Fixed APR means that your interest rate will always stay the same. Even if interest rates change, your interest rate or monthly payment will not. Fixed APR includes a 0.25% discount when you enroll in autopay.
APR
1.74% - 7.99%
3.49% - 7.99%
1.74% - 7.99%

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on SoFi's website

Overview

Variable APR:
1.74% - 7.99%
Fixed APR:
3.49% - 7.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
1.74% - 7.99%
2.74% - 7.99%
1.74% - 7.99%

View Details

on Earnest's website

Overview

Variable APR:
1.74% - 7.99%
Fixed APR:
2.74% - 7.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except KY or NV
Hardship Deferment:
Yes
Co-signer Option:
No
1.74% - 7.99%
2.74% - 7.99%
1.74% - 7.99%

View Details

on NaviRefi's website

Overview

Variable APR:
1.74% - 7.99%
Fixed APR:
2.74% - 7.99%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,001 ($10,001 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except NV
Hardship Deferment:
Yes
Co-signer Option:
No
1.86% - 6.01%
2.73% - 5.99%
1.86% - 6.01%

View Details

on ELFI's website

Overview

Variable APR:
1.86% - 6.01%
Fixed APR:
2.73% - 5.99%
Minimum Credit Score:
680
Minimum Income:
$35,000
Fees:
None
Minimum Loan Amount:
$15,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
1.74% - 8.70%
1.99% - 8.63%
1.74% - 8.70%

View Details

on Splash's website

Overview

Variable APR:
1.74% - 8.70%
Fixed APR:
1.99% - 8.63%
Minimum Credit Score:
660
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5 – 20 years
Borrower Residency:
All states
Hardship Deferment:
Varies
Co-signer Option:
Yes
1.99% - 8.38%
3.74% - 8.63%
1.99% - 8.63%

View Details

on Citizens' website

Overview

Variable APR:
1.99% - 8.38%
Fixed APR:
3.74% - 8.63%
Minimum Credit Score:
Not disclosed
Minimum Income:
$24,000
Fees:
No prepayment or origination fees
Minimum Loan Amount:
$10,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
1.89% - 5.90%
2.99% - 6.00%
1.89% - 6.00%

View Details

on Laurel Road's website

Overview

Variable APR:
1.89% - 5.90%
Fixed APR:
2.99% - 6.00%
Minimum Credit Score:
660
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
1.90% - 5.25%
2.49% - 7.75%
1.90% - 7.75%

View Details

on LendKey's website

Overview

Variable APR:
1.90% - 5.25%
Fixed APR:
2.49% - 7.75%
Minimum Credit Score:
680
Minimum Income:
$24,000
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except ME, ND, NV, RI, WV
Hardship Deferment:
Yes
Co-signer Option:
Yes
-
4.44% - 8.48%
4.44% - 8.48%

View Details

on ISL's website

Overview

Variable APR:
-
Fixed APR:
4.44% - 8.48%
Minimum Credit Score:
670
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except OR and ME
Hardship Deferment:
Yes
Co-signer Option:
Yes

There are at least 7 reasons to refinance student loans now:

  1. Get a lower interest rate
  2. Get a lower monthly payment
  3. Consolidate student loans into a single payment
  4. Choose a flexible student loan repayment term
  5. Choose a fixed or variable interest rate
  6. Get a better lender
  7. Release a cosigner

Get a lower interest rate

Student loan refinancing is the process of getting a new student loan with a lower interest rate from a private lender and using that new student loan to pay off your old student loans. There are many ways to reduce your student loan interest rate. Student loan refinancing is one of the most effective ways to get a lower interest rate for your student loans. A lower interest rate means that you can save money each month on your student loans and pay off your student loans faster. You can compare the latest rates for student loan refinancing, and if you qualify for a lower interest rate, then it may be advantageous for you to refinance your student loans.

Get a lower monthly payment

Student loan refinancing also can help you get a lower monthly payment. With a lower interest rate, you may be able to save money each month depending upon how much time you take to pay off student loans.

This student loan refinancing calculator shows you how much you can save when you refinance student loans.

For example, let’s assume that you have $80,000 of student loans at an 8% interest rate and a 10-year repayment term. Let’s assume you refinance student loans at a 3% interest rate and a 10-year repayment term. You would save $198 each month and $23,776 overall.

Consolidate student loans into a single payment

Like many student loan borrowers, you may have multiple types of federal and private student loans. This means you also may have different lenders, student loan servicers, loan types and payment dates. Often, this can be a financial headache to manage. Student loan refinancing is a smart strategy to consolidate student loans into a single payment. (Read The Complete Guide To Refinancing Student Loans). With student loan refinancing, you can combine your existing federal student loans and private student loans into a new, single student loan. This single student loan will have one lender, one student loan servicer and one monthly payment. Consolidating student loans into a single payment can make it easier to manage student loan repayment.

Compare the top lenders to refinance and consolidate student loans.

Choose a flexible student loan repayment term

If your student loan payments are too high, student loan refinancing can offer a flexible student loan repayment term. The standard repayment plan for federal student loans is 10 years. However, with student loan refinancing, most lenders allow you to choose a student loan repayment term between 5 and 20 years. A shorter student loan repayment term such as 5 years will have a relatively higher monthly payment, but it will save you more money through lower total interest. In contrast, a longer student loan repayment term such as 20 years will have a relatively lower monthly payment, but it will cost more money overall through higher total interest. You should choose a student loan repayment term that works best for your unique financial situation.

Learn how to refinance student loans.

Choose a fixed or variable interest rate

Student loan refinancing gives you flexibility to choose either a fixed interest rate or a variable interest rate. In contrast, federal student loans only have fixed interest rates. A fixed interest rate means that your interest rate will stay the same until you pay off your student loans. A variable interest rate means that your interest can increase or decrease over time. Typically, variable interest rates are lower than fixed interest rates. When should you choose a fixed interest rate versus a variable interest rate? If you expect interest rates to increase, then you could choose a fixed interest rate to lock-in a relatively lower interest rate today and save money over time. Even if interest rates rise, your fixed interest rate will remain the same. In contrast, if you expect interest rates to decrease, then you could choose a variable interest rate to save money over time. As interest rates fall, for example, you would save money by paying lower interest.

Get a better lender

Student loan refinancing also is an opportunity to get a better lender. If you’re unsatisfied with your lender or student loan servicer, student loan refinancing can help you choose a different lender or student loan servicer, or both. This can make student loan repayment easier and with less hassle. It’s important to choose a lender with strong customer service as well as low rates and flexible loan terms.

Learn the Top 30 questions about student loan refinancing.

Release a cosigner

When you refinance student loans, one advantage is that you can release a cosigner. What is a cosigner? A cosigner is a parent, spouse or other family member who may have applied with you when you borrowed a student loan. If you now have a high credit score and steady income, you may want to apply to refinance student loans and release your cosigner. This means that your cosigner will no longer be financially responsible for your student loans. Many lenders offer a cosigner release when you refinance student loans, so make sure your lender offers this option if you plan to release a cosigner.

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