You may receive a lower interest rate, a lower monthly payment, or both by refinancing your student loans. Right now, there is a perfect storm of competitiveness, favoring borrowers, particularly those with the highest salaries and finest credit histories. With all 8 of the major lenders mentioned in this article, you can receive a student loan refinance bonus of up to $1,000 or more if you use something called Student Loan Planner® and have a high debt balance.
We'll show you how to compare the top student loan refinance firms, whether or not you should refinance your federal and private student debt, and where to find the best student loan refinance offer.
More than 95% of the time, the six lenders in the table below give the lowest interest rates. You may see the whole list of the eight refinancing firms further down the page if you want to confirm that you have found the cheapest deal.
Should My Student Loans Be Refinanced?
I believe that by refinancing, the majority of private student loan debtors in the US could find an interest rate that is currently lower. Unfortunately, inertia is a strong force and many borrowers fail to act as they ought to when they may save thousands of dollars with a quick application.
Due to the current low interest rate and low credit risk climate, borrowers who refinanced even a few months ago frequently discover better bargains. Remember, as long as you can discover a cheaper interest rate, you can refinance your private student loans as often as you like.
Many borrowers who are interested in refinancing federal student loans may postpone their applications until late December 2022 or possibly August 31, 2022. This is due to President Biden having previously prolonged the freeze on student loan interest for an additional 90 days past the prior January 31 expiration date of an earlier student loan relief order. If you want to be certain you do not lose out on this incentive, you might apply in early August and wait to accept an offer until after the 0 percent period has passed as most refinancing offers are valid for 30 days.
In light of this, borrowers who obtain a refinancing offer in the 3 percent range or higher may want to do so right away rather than waiting for the delay to end. In the end, you might think about refinancing now if you would be dissatisfied if interest rates rose between now and the end of the year because they might rise considerably higher before the pause ends. In reality, typical 30-year mortgage rates increased from 3 percent to 5 percent during the course of around 4 months, and since the Fed is tightening monetary policy, further interest rate rises could be in store.
Of course, another extension of the student loan freeze as we approach the midterms is also very conceivable. Therefore, only refinance federal student loans if doing so won't make you regret it if the government decides to prolong the 0% interest subsidies through the beginning of 2023.
The good news is that your choice should be simple if you have private student loans. Private student loan borrowers should apply widely and choose the offer with the lowest interest rate. You should probably check to see if you can cut your rate any more given how much rates have dropped.
The Best Refinancing Deal Obtaining Method
Here's why using Student Loan Planner® to compare lenders will help you get the best refinancing rate.
Since it's difficult to foresee who will provide you the best student loan refinancing rates, we advise you to compare prices.
The great bulk of the student loan refinancing market is made up of our partner lenders.
We pay less for advertising so we can give you perks you won't find anywhere else.
Please let us know if you discover a better student loan refinancing offer elsewhere because it should be quite difficult to do so.
Along with a lower interest rate, receive the best student loan refinancing bonus possible.
Though you apply with a new email that you haven't used previously even if you've already started an application with one of the businesses mentioned above, you'll still be eligible for the bonus.
You receive a greater offer than you would have if you had applied directly because of the compensated referral relationship we have with our partners.
The websites that appear first in Google search results make an effort to conceal the fact that they provide their readers with absolutely no advantage for refinancing student loans. They retain the larger profit margin for themselves, which explains this. To give you a bonus, we'd prefer to accept a smaller commission.
Be aware that in order to qualify for some of these firms' bonuses, you must refinance a certain minimum amount with that lender.
Reach back to us as soon as you are finished applying if you are refinancing a six figure loan amount large enough to qualify for a $1,000 or greater student loan refinance incentive so we can keep track of it. Before you sign the documentation for the refinancing, make sure your loan seems to have been credited to Student Loan Planner® by using the contact button on this page, which is located in the bottom right corner. Alternatively, send an email to assistance AT studentloanplanner DOT com.
To obtain a tailored recommendation, complete our quiz below if you're unsure which business to start with.
When to Refinance Private Student Loans and Federal Loans
Here is what I advise borrowers when they inquire about refinancing their federal and private student loans after advising them on more than $1.9 billion in student debt. As of right now,
If any of the following apply to you: You work in the private sector;
Keep a healthy emergency fund.
Expect to owe less than 1.25 times your salary in federal debt.
Are you to give up the possibility of being eligible for the PSLF program, forbearance/deferment, forgiveness, and income-driven repayment programs
Get a loan with an introductory interest rate of 0% OR discover a rate that is so low that anticipate it will disappear in a few months.
2. If you can discover a cheaper rate than your current loans, refinance your private student loans.
Want your monthly loan payment to be higher or lower?
not looked at current offers in the previous six months
Have your credit score or income increased?
Keep in mind that you are permitted to refinance private loans up to four times. Finding a lower rate is the only thing that matters.
The Best Student Loan Refinance Company to Choose
Thousands of professionals with six-figure school debt participated in our surveys. Among these debtors, just 10% check more than three lenders. For corporations that refinance student loans, this means greater revenues. You should at least look into a few different possibilities because it just takes a business two to five minutes to provide you with a rate estimate.
Your basic information will be required, and if you might be eligible, the business will provide you with a rate estimate. A "soft credit check" like this has no effect on your credit score.
Once you've found one or two businesses that provide good prices, you can agree to a hard credit check, which will have a very slight, brief, and one-time impact on your credit score (often 5 to 10 points). It's nothing to worry about unless you're going to be applying for a mortgage one or two weeks after you apply for your student loan refinance because this is comparable to applying for a credit card.
Rates are directly offered by some student debt refinance companies, including Earnest, ELFI, SoFi, and Laurel Road. On their platforms, others, like Credible and LendKey, connect you to a network of lenders you probably wouldn't look into on your own.
You may submit applications to as many businesses as you like. Rate shopping is regarded to have only one negative impact on your credit score if you do it within 30 days.
What Are the Currently Available Interest Rates for Refinancing Student Loans for the Best Qualified Borrowers?
Your credit history, income, debt-to-income ratio, and a number of other criteria will all affect the interest rate on a refinanced student loan.
The lowest fixed interest rates that are currently available countrywide as of mid-2022 are listed in the table below. Although variable rates are also offered, the majority of our readers prefer loans with fixed rates.
You shouldn't necessarily anticipate receiving a rate that low. The table simply displays the situation of the refinancing market right now for the best-qualified borrowers so you can decide whether or not to apply.
Comparison of all 8 student loan refinancing companies
To find the best interest rate, compare the 8 student loan refinance lenders listed below. We provide the main factors that could influence your decision to use each lender, the cash incentive terms available (some are based on the amount refinanced), lender-specific reviews if you want to learn more, as well as a star rating that takes into account our readers' long-term feedback.
By profession, the top student loan refinancing companies in 2022
We conducted a survey of more than 6,200 of our readers in April 2022. Our readers tend to earn more money and have more debt than the average student loan borrower. In February 2021, we conducted a similar survey, and more than 3,200 people responded.
You can see how much market share the top lender in each profession over time by comparing the first place lender for each profession in our 2022 survey to our 2021 survey.
You need to submit applications to more organizations in order to receive the best rate the smaller the market share of the leading lender in your industry is.
When compared to other lenders, Laurel Road maintained aggressive pricing in 2022 for certain healthcare vocations like dentists, doctors, and optometrists.
Student debt refinancing market share is substantially more dispersed outside of those three professions. If your profession is not included in the list above, you should be ready to submit numerous applications because most professions do not have a dominant lender.
Notably, Commonbond, which was listed in earlier polls, no longer offers student debt refinancing.
The market for refinancing student loans is dominated by three companies.
For each job category we looked at, we discovered that one of Earnest, SoFi, or Laurel Road had the majority of the student loan refinancing volume. The first three companies would be great starting points if you just searched three.
Why it's Still Important to Compare Prices at Different Businesses
Nevertheless, observe that no single company accounted for more than half of the refinancing volume for a given profession. Less than one third of the market was taken by the most well-liked corporation for the majority of positions.
Therefore, it is still beneficial to check with three to five different lenders to determine what kind of interest rate they are willing to offer. Additionally, you can contrast different loan terms, interest rate reduction alternatives, and repayment options.
For instance, businesses occasionally provide momentary interest rate savings that are far better than those provided by the top three student loan refinancing firms. Shopping around is wise because you can never be sure when that will occur.
Guides for Professionals on Student Loan Refinancing
Dentists must take into account significantly different factors than lawyers when refinancing student loans. See some of our most well-liked guides to student loan refinancing for various professions below.
Standard Refinancing FAQs
The most frequent queries we receive from readers considering refinancing are listed below.
How can I obtain a bonus for refinancing student loans?
Simply submit an application through Student Loan Planner® by clicking on the links in this page. You'll receive a cash bonus soon after your loan funds if you have a large enough loan quantity. To combine the maximum student loan refinance bonuses you see above, Student Loan Planner® occasionally adds a $500 student loan refinance bonus to what a lender already offers.
Is it possible to combine government and private loan refinancing?
Yes, you can work with a private lender to combine federal and/or private student loans into a single new loan. Federal student loans are not something we would advise including until the interest rate freeze is over.
My credit score will be impacted by refinancing.
When you refinance, your credit score may drop by as little as five to ten points. This effect is transitory. If your student loans ever cause you to be turned down for a mortgage or business loan, it will be because your monthly payment is too high and not because refinancing has hurt your credit score.
How much of a reduction in interest rate do I need to achieve before I can refinance?
In order to justify giving up income-driven repayment plans and forbearance choices for federal student loans, strive for a rate that is at least 0.5 percent lower than the one you currently have. Refinancing is appropriate for private loans when the new rate is at least 0.25 percent lower than the old one.
Can I sign for myself on my parent's loan?
It is possible to change a Parent PLUS or privately cosigned loan to just your name. One lender that will do this is Laurel Road.
Should I pick a fixed rate or a variable rate?
If you can afford to bear the chance of your rate rising, variable interest rates can save you money through lower interest charges. If you could afford to pay off your student loan quickly and you receive a rate offer that is at least 1% lower than the fixed rate offer, you might want to think about variable rates. The majority of borrowers choose fixed rates.
My student loans can be refinanced more than once.
Yes. As many times as you can discover a better interest rate, you can refinancing your loans. At least once a year, you should look into other lenders to see if you can further reduce your interest costs. Numerous debtors refinance twice, three times, four times, and sometimes five times.
Who is eligible for student loan debt refinancing?
You must be a US citizen or permanent resident, have qualifying student loan debt from an approved college or university, have a credit score of at least 650, and spend less than 36% of your income on debt payments in order to be eligible for a refinance loan.
What safeguards apply to refinanced student loans?
The majority of private lenders permit forbearance for up to three months. Verify by looking over your promissory note. Make sure you have adequate term life and disability coverage because repayment of private student loans in the event of your death or incapacity may be treated as taxable income.
What transpires to refinanced loans if a divorce occurs?
The entire amount is owed by the borrower whose name is on the loan. In the event of divorce, cosigning a spouse's school debt carries a risk. In states where there is communal property, other factors might be relevant.
How soon after being rejected may you reapply for a refinance?
The most common reasons for student loan refinancing denials are having a low credit score, having a high debt to income ratio, or having attended an ineligible school. You can reapply as soon as 30 days after making any improvements to your credit profile, such as lowering your debt-to-income ratio.
I have student debts; when should I refinance them?
When you've decided that student loan forgiveness won't help you, your employment is secure, and you have an emergency fund, it's a good idea to refinance.
What distinguishes refinancing from consolidation? Do they differ or are they the same?
Combining several federal student loans into a single new Direct Consolidation loan through studentloans.gov is known as student loan consolidation. Moving your debt to a private lender for a cheaper interest rate, a smaller monthly payment, or both is known as refinancing. Although technically many loans can be "consolidated" into one through refinancing, we prefer to save the term "consolidation" for the government version of consolidation.
Which loans fall under the refinancing category?
In general, you are qualified for any federal or private student loans you obtained while attending school. Student loan refinancing is not possible if you have credit card debt, personal loans, residency relocation loans, or other debt that you may have accrued while pursuing your education.
What is the recommended frequency of student loan refinancing?
whenever a lower interest rate is available. This is especially true if you get a bonus for refinancing student loans every time you use a different lender.
How can someone with bad credit refinance private student loans?
As long as you have a suitable co-signer, you can still refinance even with bad credit. Apply to a lot of lenders if you wish to refinance in your own name because some have softer underwriting standards. By making loan payments on schedule and paying off credit card debt, you should also try to raise your credit score.
How quickly may my student loans be refinanced?
Once you have graduated and can demonstrate your income, typically by a signed offer letter or contract stating your pay, you can remortgage as quickly as possible. With signed offer letters, some professionals, such as dentists and doctors, may be able to refinance several months prior to their higher post-training salary.
When should you avoid refinancing?
Refinancing is not a good option if you want to get your student loans forgiven. To even consider leaving the security of the federal student loan system, you typically need to have debt that is less than double your income and a job in the private sector. The sole risk of refinancing, however, if your loans are private, is picking a monthly payment that is too high for you to easily make each month.
After so many extensions of the student loan interest freeze, should I ever refinance my federal student loans?
The suspension of student loan interest due to the pandemic national emergency may be extended by President Biden (see HEROES Act of 2003). The government will resume charging the standard rate of interest on federal student loans after cases have drastically decreased because the President will no longer have emergency authority over federal student loans. Refinancing is a terrific strategy to permanently lower your interest rate and make sure more of your payments go to principal rather than interest if you know you will eventually pay off your debt. Refinancing cannot be reversed, so avoid doing it if you are hesitant.
This article was contributed on Jul 31, 2022
