Essential insights
- Keep in mind: swapping federal loans for private ones is the only way to refinance federal debt.
- Digging deep into various repayment plans is crucial when revamping private student loans.
- Combining federal and private loans in your refinancing strategy calls for a few extra moves.
Juggling multiple student loans? Chances are you’re aiming to consolidate them into a single new loan with friendlier rates and payments. But before you jump in, here’s a critical heads-up: only fresh private loans can replace your existing ones during refinancing.
There isn’t a federal program designed for refinancing current federal student loans. Though private lenders tend to offer rates that beat federal ones, they lack federal loan perks like hardship relief options.
Prioritize not just hunting for the slickest refinancing deal tailored to your goals but also assessing which loans actually warrant refinancing, given your financial picture.
5 Savvy Moves to Refinance Your Student Loans
Before hitting submit on that loan application, a few groundwork steps will set you on the path to scoring the best deal:
1. Size up whether refinancing suits you best
Heads up: Trading federal student loans for private ones means sacrificing protections like forbearance and income-driven repayments—benefits exclusive to federal loans.
Kick off by checking your eligibility: most lenders expect a FICO score north of 670 to consider refinancing you.
Crunch the numbers with a student loan calculator
Want to pit your current loan’s terms against fresh refinancing options? Tools like Bankrate’s calculator can offer clarity and assist decision-making.
Expert take: Is refinancing truly the smartest play?
Andrew Pentis, Bankrate’s lead writer and student loan guru, weighs in:
Refinancing shines if you’re aiming for a lightning-fast payoff — slicing interest costs and wiping out your debt ahead of schedule is the name of the game. This turbocharged approach puts you in the driver’s seat and brings peace of mind sooner.
— Andrew Pentis, Bankrate principal writer
That said, a more measured repayment pace might suit you better in some cases. If you’re juggling federal loans on a modest paycheck, sticking with federal safeguards like reduced payments could be wiser.
2. Dig into lender research
Key factors to scope out when evaluating lenders
- Actual interest rates offered versus advertised quotes
- Eligibility criteria and qualification hoops
- Cosigner acceptance to bolster approval chances
- Sweeteners like bonuses or perks
- Payment flexibility and alignment with your budget
- Options to shift due dates or skip payments without penalty
- Fee structures and how they stack against rivals
- User reviews reflecting borrower experiences
Once you’re set on refinancing, compile a shortlist of lenders whose offerings resonate with your needs. Marketplaces like Bankrate can ease this by letting you eyeball rates, eligibility rules, discounts, and trusted ratings across many lenders in one spot.
If you’re a lone wolf shopping independently, scope out at least three private lender categories—banks, credit unions, and online lenders—to get a comprehensive view of what’s on the table.
Notable lender highlights:
- Citizens Bank: Eligible applicants may refinance up to $750K with repayment stretches up to 20 years. Plus, existing banking customers snag a 0.25% interest break.
- SoFi: Starting April 2025, SoFi rolled out an interest-only payment option for 7-, 10-, 15-, and 20-year refinance terms, ideal for borrowers in job transitions looking to ease initial costs.
Eyeing private lenders over federal ones? Here are seven with perks reminiscent of federal loan benefits.
Some private lenders mimic federal loan features — keep them on your radar.
Don’t skimp on sizing up customer service
It’s tempting to fixate solely on snagging the lowest rate, but Pentis stresses the value of good service early on. “Lenders who patiently and clearly answer questions during the application phase often stay responsive after you sign,” he notes.
Conversely, poor pre-application service rarely improves post-signature:
If a lender dazzles with terms but leaves you hanging when you need help, expect little change after you become a client.
— Andrew Pentis, Bankrate principal writer
3. Hunt for the ideal loan tailored to your credit and income profile
Private student loans hinge heavily on your creditworthiness and earnings, unlike federal loans which usually don’t demand credit checks or income verification.
Your interest rates may range from just under 4% to the low double digits, depending on your credit rating. Since lenders often impose minimum credit and income floors, find those aligned with your credentials.
Rule of thumb: prequalify with at least three lenders. This “soft” check won’t ding your credit and reveals potential rates and terms you’re likely eligible for.
Real-life win: From default to 1.8% interest rate
Caitlin Cipriano faced tight monthly payments on her student loans until a savvy refinance lender offered her offbeat advice that landed her an interest rate below 2%.
Don’t forget to verify your credit score and await approval, which generally lands within 1–3 business days, though complex income sources might slow the process.
Documents you’ll want on hand
- Social Security Number (SSN)
- Driver’s license or other government-issued ID
- Loan payoff statements from current loan servicers
- Proof of graduation
- Employment verification (pay stubs, W-2 forms, etc.)
5. Shift payments to your new lender
Once refinancing wraps up and your debt transfers, the old lender should send a payoff confirmation. Then, set up an account with your new servicer and start making payments on your revamped loan.
Watch for communication from your new lender outlining your first payment due date. Many lenders let you pick monthly due dates that mesh with your cash flow, some even sweeten the deal with interest-rate discounts when you enable autopay.
Words of wisdom from Bankrate:
Keep sending payments on your original loan until you receive official confirmation that the balance is zero. You remain responsible until the refinance closes. Overpaying is easier to remedy than a ding on your credit report.
Frequently Asked Questions
How much time does refinancing a student loan typically take?
Refinance timelines vary by lender and your responsiveness in providing documents. While applications can be swift, payoffs by the new lender may require patience—expect anywhere from 30 to 45 days in many cases.
Is it possible to transfer student loans into someone else’s name?
Certain private lenders allow loan transfers between spouses or offer cosigner release options. Occasionally, courts can reassign loans during divorce or separation settlements.
Can student loans be refinanced with poor credit?
Though refinancing with low credit scores is doable, elevated interest rates might undercut the benefits. Partnering with a creditworthy cosigner often boosts approval odds and secures better rates.