When to Refinance Student Loans

By Mentor Staff | Edited By Mentor Staff

Updated On January 20, 2022

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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If you want to know when to refinance student loans, the answer is “as soon as possible.” When you refinance student loans, you receive a lower interest rate that can save you money and pay off student loans faster.

When to refinance student loans depends on several factors, including when you can get a lower interest rate compared to your current student loans. For example, let’s assume you have $50,000 of student loans at an 8% interest rate and a 10-year repayment term. If you can refinance your student loans and receive a 3% interest rate and a 10-year repayment term, you would save $124 per month and $14,860 total.

Top Picks For Student Loan Refinancing

August 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
2.24% - 7.99%
3.49% - 7.99%
2.24% - 7.99%

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on SoFi's website

Overview

Variable APR:
2.24% - 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%
3.24% - 7.99%
1.74% - 7.99%

View Details

on Earnest's website

Overview

Variable APR:
1.74% - 7.99%
Fixed APR:
3.24% - 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%
3.24% - 7.99%
1.74% - 7.99%

View Details

on NaviRefi's website

Overview

Variable APR:
1.74% - 7.99%
Fixed APR:
3.24% - 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% - 7.98%
3.39% - 6.99%
1.86% - 7.98%

View Details

on ELFI's website

Overview

Variable APR:
1.86% - 7.98%
Fixed APR:
3.39% - 6.99%
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
1.99% - 11.57%
2.59% - 12.46%
1.99% - 12.46%

View Details

on Splash's website

Overview

Variable APR:
1.99% - 11.57%
Fixed APR:
2.59% - 12.46%
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
2.24% - 9.23%
4.29% - 9.73%
2.24% - 9.73%

View Details

on Citizens' website

Overview

Variable APR:
2.24% - 9.23%
Fixed APR:
4.29% - 9.73%
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% - 6.30%
3.99% - 6.40%
2.50% - 6.40%

View Details

on Laurel Road's website

Overview

Variable APR:
2.50% - 6.30%
Fixed APR:
3.99% - 6.40%
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
2.62% - 5.67%
2.99% - 9.93%
2.62% - 9.93%

View Details

on LendKey's website

Overview

Variable APR:
2.62% - 5.67%
Fixed APR:
2.99% - 9.93%
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

How Can You Refinance Student Loans?

You can refinance federal student loans, private student loans or both. There is no limit to the number of times that you can refinance student loans. Since the federal government does not refinance student loans, you can refinance federal student loans, private student loans or both with a private lender.

When lenders refinance student loans, they want borrowers who have:

  • Good Credit. Lenders want to refinance student loans for borrowers with at least a credit score in the mid-600’s. Many borrowers who are approved for student loan refinancing have a credit score in the 700’s or higher.
  • Good Income. Lenders like borrowers who received a college or graduate degree, who are employed, and who have stable and recurring income. If you will graduate soon, you can also submit a written job offer.
  • Low Debt-To-Income. Lenders want to ensure that you can repay your refinanced student loan. So, they will review your credit report and other information to ensure you can pay monthly living expenses, student loan payments and any other debt payments. Lenders may examine your debt-to-income ratio, which is the amount of debt you owe as a percentage of your income. A lower debt-to-income ratio is preferable.

If you have bad credit, lower-income or don’t meet these qualifications, you can apply with a co-signer.

How Soon Can You Refinance Student Loans?

You can refinance student loans as soon as you have the necessary credit and income. The sooner you can refinance student loans, the better because you can start saving money and pay off student loans faster. Lenders want borrowers who have sufficient income to cover living expenses and their debt payments. They also want to refinance student loans for borrowers with a history of financial responsibility. This means you pay your bills on times and don’t skip payments. If you fit this profile, then you can refinance student loans now.

When To Refinance Student Loans

If you want to know when to refinance student loans, here are some examples:

  • Your student loans have high interest rates. If you are paying too much for your student loans each month, then check out the latest interest rates to save money. When you refinance student loans, you can choose either a fixed interest rate or variable interest rate.
  • You have good credit and income. If you have good credit, stable and recurring income, and a history of financial responsibility, you may be a good candidate to refinance student loans. Lenders want to ensure you have enough income to repay your student loans and other living expenses.
  • You already have private student loans. When you refinance student loans, you will not have access to federal student loan benefits such as income-driven repayment or public service loan forgiveness. Private student loans do not have these benefits anyway, so you when you refinance private student loans, you don’t have to worry about losing these benefits.
  • You want to change your loan terms. When you refinance student loans, you can change your current loan terms. For example, you can choose either a fixed interest rate or variable interest rate. You can also choose a different student loan repayment period, which typically ranges from 5-20 years.
  • You want to change your lender or student loan servicer. When you refinance student loans, you can change your lender and student loan servicer. This may provide an opportunity for better customer service.
  • You have variable interest rate loans. If you have variable interest rate debt, and interest rates are increasing, you may have to pay more in the future for your student loans. If you want to pay the same interest rate each month for your repayment term, you can refinance student loans and switch to a fixed interest rate.
  • Anytime you want a lower rate. You can refinance student loans as many times as you would like. There are no fees to refinance student loans. If you can get a lower interest rate each time, it may be a smart financial move.
  • Anytime you want to save money. The goal of student loan refinancing is to get a lower interest rate and save money. If you qualify for a lower interest rate, you should consider refinancing.

When Not To Refinance Student Loans

Here’s when not to refinance student loans:

  • You want student loan forgiveness. If your goal is Public Service Loan Forgiveness or Teacher Loan Forgiveness, then keep your federal student loans outstanding. You need federal student loans to be eligible for these programs. The good news is you can still refinance private student loans.
  • You are unemployed or underemployed. Lenders want to refinance student loans for borrowers who are employed and have stable, recurring income. Lenders want to ensure that you earn enough money each month to afford your student loan payments and other living expenses.
  • You plan to enroll in an income-driven repayment plan. When you refinance federal student loans, you will receive a new private student loan with a lower interest rate. You will no longer have access to income-driven repayment plans such as IBR, PAYE, REPAYE or ICR, which can lower your monthly payment based on your income.
  • You defaulted on your student loans. If you recently defaulted on your student loans,you’re likely not a good candidate to refinance student loans. Lenders likely will not refinance student loans for borrowers who recently defaulted on their student loans or declared bankruptcy. If the default has been removed from your credit report, you may qualify to refinance student loans if you meet the other requirements.

Learn more:

Compare the latest rates for student loan refinancing

Compare the latest rates for law school student loan refinancing

Compare the latest rates for medical professional student loan refinancing

Compare the latest rates for medical resident student loan refinancing

Compare the latest rates for pharmacy school student loan refinancing

Compare the latest rates for MBA student loan refinancing

Compare the latest rates for nursing school student loan refinancing

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