5 Student Loan Refinance Myths Dispelled

By Mentor Staff | Edited By Mentor Staff

Updated On November 2, 2021

Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.

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How many student loan refinance myths have you heard before?

Mentor readers regularly ask questions regarding student loans. Some of the most popular topics relate to student loan refinance, student loan repayment, student loan consolidation and student loan forgiveness.

Here are 5 popular student loan refinance myths shared by real student loan borrowers – as well as responses – that not only can help guide your path forward, but also save you time and money:

Top Picks For Student Loan Refinancing

December 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
4.49% - 8.99%
4.49% - 8.99%
4.49% - 8.99%

View Details

on SoFi's website

Overview

Variable APR:
4.49% - 8.99%
Fixed APR:
4.49% - 8.99%
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
3.99% - 8.29%
4.39% - 8.99%
3.99% - 8.99%

View Details

on Earnest's website

Overview

Variable APR:
3.99% - 8.29%
Fixed APR:
4.39% - 8.99%
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 NV
Hardship Deferment:
Yes
Co-signer Option:
No
3.99% - 8.29%
4.39% - 8.99%
3.99% - 8.99%

View Details

on NaviRefi's website

Overview

Variable APR:
3.99% - 8.29%
Fixed APR:
4.39% - 8.99%
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
3.53% - 7.24%
4.48% - 7.29%
3.53% - 7.29%

View Details

on ELFI's website

Overview

Variable APR:
3.53% - 7.24%
Fixed APR:
4.48% - 7.29%
Minimum Credit Score:
680
Minimum Income:
$35,000
Fees:
None
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
2.50% - 8.65%
3.99% - 8.49%
2.50% - 8.65%

View Details

on Splash's website

Overview

Variable APR:
2.50% - 8.65%
Fixed APR:
3.99% - 8.49%
Minimum Credit Score:
640
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5 – 25 years
Borrower Residency:
All states
Hardship Deferment:
Varies
Co-signer Option:
No
5.09% - 11.67%
5.39% - 11.87%
5.09% - 11.87%

View Details

on Citizens' website

Overview

Variable APR:
5.09% - 11.67%
Fixed APR:
5.39% - 11.87%
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
2.50% - 6.80%
4.49% - 6.90%
2.50% - 6.90%

View Details

on Laurel Road's website

Overview

Variable APR:
2.50% - 6.80%
Fixed APR:
4.49% - 6.90%
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
3.27% - 6.87%
3.99% - 10.68%
3.27% - 10.68%

View Details

on LendKey's website

Overview

Variable APR:
3.27% - 6.87%
Fixed APR:
3.99% - 10.68%
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
-
3.94% - 9.08%
3.94% - 9.08%

View Details

on ISL's website

Overview

Variable APR:
-
Fixed APR:
3.94% - 9.08%
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

Student Loan Refinance Myths #1: “I’m not going to apply to refinance my student loans because I don’t have an 800 credit score.”

You do not need an 800 credit score to be approved for student loan refinance.

Many highly reputable private student loan companies will refinance student loans with credit scores starting in the mid-600’s. Each private student loan company has its own underwriting criteria, which may include credit score, employment status and monthly cash flow, among other criteria. If you do not qualify on your own for student loan refinance, most companies will still refinance your student loans with a qualified co-signer.

A co-signer can be another creditworthy person (e.g., a parent, spouse, relative or friend supportive of your educational goals) to help you qualify for a student loan. A co-signer is equally responsible with you for the student loan obligation.

Plus, once you have been approved for a refinanced student loan or new student loan, your co-signer may not want to be financially responsible for your student loan. In this case, some student loan companies will release the co-signer from his or her obligations to repay the student loan.

Student Loan Refinance Myths #2: “I have been working as a public school teacher for 5 years and made all my student loan payments on time. Why haven’t my Sallie Mae student loans been forgiven?”

There are several misconceptions regarding Public Service Loan Forgiveness and Teacher-Student Loan Forgiveness.

The key point to remember is that you must have a federal direct student loan, Stafford Loan or consolidated loan that you borrowed from the federal government.

There are many examples of student loan borrowers who have believed for years that they made qualifying student loan payments on federal direct student loans only to learn later that their student loans were private student loans. You should confirm in writing with your student loan servicer what types of student loans you borrowed.

A student loan that you borrowed from a private student loan lender such as Sallie Mae is not eligible for student loan forgiveness.

PLUS Loans also are not eligible. Importantly, you have to apply for Public Service Loan Forgiveness and Teacher Student Loan Forgiveness (you are not automatically enrolled) and have to meet certain qualifications.

Student Loan Refinance Myths #3: “I already refinanced my student loans so I can’t refinance student loans again to take advantage of today’s low interest rates.”

The good news is that there is no limit on the number of times that you can refinance your student loans.

If you can find a lower student loan interest rate, then you can apply to refinance. There are no prepayment penalties on your existing student loans, and you should only apply to refinance your student loans with companies that do not charge an application or origination fee.

Student Loan Refinance Myths #4: “I can only apply to one lender for student loan refinance. Otherwise, applying to more than one lender will hurt my credit score.”

Not true. You should apply to multiple student loan lenders to maximize your chances for approval. Most applications take only two minutes, and you can check your new interest rate with only a soft credit pull (which does not impact your credit score). According to FICO, student loan “interest rate shopping” inquiries made during a focused time period (for example, 30 days) will have little to no impact on your credit score.

Student Loan Refinance Myths #5: “I don’t want to apply for student loan refinance because I don’t want to refinance all my student loans.”

You can refinance all or some of your student loans.

For example, if you have high-interest rate student loans, you may want to refinance these student loans only and not include your lower interest rate student loans.

The goal is to lower your overall student loan payments and save on student loan interest. The good news is that the choice is yours.

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