How to Refinance Student Loans With Low Income

Refinancing student loans can help streamline repayment and lower your interest rate, but qualifying can be challenging if you have a low income. Many lenders have specific credit and income requirements, making it difficult for low-income borrowers to get approved.

Income requirements vary by lender, with some expecting at least $30,000 annually, while others assess multiple factors without a strict minimum. “Low income” is often defined in relation to federal poverty guidelines, but each lender’s approach may differ. This article explores how to refinance student loans with low income and compares private refinancing options to federal loan consolidation.

Low-income student loan refinance options

If you’ve taken out student loans—whether federal, private, or both—you might be considering refinancing to streamline repayment and potentially lower your interest rate. However, qualifying for refinancing typically requires meeting a lender’s criteria for credit and income, which can be challenging for low-income borrowers.

For federal student loans, a more accessible alternative to refinancing is the federal Direct Consolidation Loan. Unlike refinancing, consolidation has no income or credit requirements, making it a viable option for low-income borrowers. Consolidating your federal loans can simplify repayment by combining multiple loans into one and offering new repayment plans, although it won’t reduce your interest rate like refinancing might.

Refinance vs. consolidation 

Both refinancing and consolidation can combine multiple loans into one, but they function differently:

• Refinancing: Involves taking out a new private loan to replace your current loans, with the potential to lower your interest rate. However, it often requires a strong credit score and sufficient income to qualify. Both federal and private loans can be refinanced, but you’ll lose federal loan benefits if you refinance federal loans.
• Direct Loan Consolidation: Available only for federal loans, this option allows you to combine your loans into one with the U.S. Department of Education, offering new repayment terms without any income or credit requirements. While you won’t lower your interest rate, you maintain access to federal loan benefits.

Federal loan consolidation may be the better option for low-income borrowers if qualifying for refinancing is difficult. It provides the simplicity of a single payment and access to income-driven repayment plans, even though it doesn’t offer an interest rate reduction.

Here’s a quick comparison of these options:

	Student loan refinance	Direct Loan Consolidation
Loan issuer	Private lender, such as a bank, credit union, or online lender	U.S. Dept. of Education
Eligible loans	Private and federal student loans	Only federal student loans
Potential to reduce interest rate	Yes	No
Option to choose new repayment terms	Yes	Yes
Can combine multiple loans into one	Yes	Yes
Has income and credit requirements	Yes	No
May need a cosigner to qualify	Yes	No

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Tip

You can find a list of all your federal student loans by signing into your account on the Federal Student Aid website with your FSA ID. While there’s no centralized dashboard for private student loans, you can find out who your lender is by checking your loan statements or reviewing your credit report. 

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If you have private student loans and are considering refinancing, here’s a closer look at private lender requirements for low-income student loan refinance. 

Lender	Min. income to refinance	Allows cosigners?
Credible*	Depends on lender	✅
LendKey*	Depends on lender	✅
ELFI	$35,000	✅
Earnest	Requires consistent income; no specific minimum	✅
SoFi	Not disclosed	✅

Our expert’s advice

Erin Kinkade

CFP®

Engage with a financial professional specializing in refinancing for low-income households. A financial counselor or financial planner who offers pro-bono hours could provide opportunities to not only consolidate student loans but also help with a plan to pay off the debt and other debts. In addition to researching where you can get free or low-cost help, I suggest focusing on the pros and cons of the current loans versus refinancing. Ultimately, the determination should be an economic benefit to you as the borrower.  

Eligibility and requirements to refinance student loans 

These are the typical requirements you must meet to refinance student loans: 

• Minimum income: Lenders usually want to see that you make a certain income to ensure you can repay your refinanced student loan. Some lenders will accept an offer of employment that will begin within the next few months. 
• Acceptable debt-to-income ratio (DTI): Your DTI compares monthly debt payments with gross income. Lenders usually prefer a DTI under 36%.
• Sufficient credit score: Your credit plays a large role in whether you can get approved for refinancing and the interest rate you get. A good FICO score of 670 or higher will help you access the best rates. 
• Education status: Some lenders require that you’ve graduated with your degree, while others will approve current students. 

If you don’t have sufficient credit or income to qualify for refinancing, you may still be able to get approved by applying with a cosigner. A cosigner will share responsibility for your debt, though some lenders offer cosigner release after a certain number of payments. 

Pros and cons of refinancing with low income 

The pros and cons of refinancing student loans with a low income are worth considering before you apply. 

Pros

• Lower your interest rate

  It could be tough to qualify for student loan refinance with a low income or weak credit, and your options for lenders may be limited. 

• Choose new repayment terms

  You can often choose repayment terms between five and 20 years. 

• Simplify repayment

  If you refinance multiple loans, you can combine them into one for a single monthly payment. 

Cons

• May be difficult to qualify

  It could be tough to qualify for student loan refinance with a low income or weak credit, and your options for lenders may be limited. 

• A lower rate isn’t guaranteed

  A low income could make it difficult to qualify for a lower interest rate. 

• Could lose access to federal benefits

  Refinancing federal loans means replacing them with a private loan. Your new refinanced loan won’t be eligible for federal protections, including federal repayment plans, forbearance, deferment, and forgiveness programs. 

How to refinance student loans with low income

If you decide refinancing makes sense for you, here are the steps you can take to apply: 

1. Check your credit. Along with income, your credit can make or break your student loan refinancing application. Check your score before you apply so you know what you’re working with. Consider enlisting a cosigner if your credit is on the low side. 
2. Shop around with lenders. Some lenders have more stringent requirements than others, so look for ones that match your financial profile. You may be able to check your offers through prequalification, which allows you to see if you can get approved without undergoing a hard credit inquiry. 
3. Compare your refinance offers. To choose your best offer, look for a loan with a low interest rate, few or no fees, and repayment terms that suit your budget. Consider whether the lender offers other benefits, such as payment modification if you lose your income. 
4. Choose an offer and apply. If you find an appealing offer, you can submit an official application and any verifying documentation the lender requires. Once everything goes through, you’ll start paying back your new, refinanced student loan. 

What our expert recommends

Erin Kinkade

CFP®

Evaluate your new projected monthly payment with a refinanced loan. If it doesn’t fit your budget, I don’t suggest that you refinance. Instead, continue to repay your student loans while communicating with the lender if you’ll be late on a payment. Reevaluate consolidation when your cash flow is more favorable, your credit has increased, interest rates are more favorable, or your income has increased.

Alternatives to student loan refinance 

If refinancing is not the best option for you, consider these alternatives for managing your private student loans: 

• Contact your lender about your options: If you’re concerned about missing payments, contact your lender ASAP to see whether it can help. Options might include temporary forbearance, payment modification, new repayment terms, or an adjusted payment due date. 
• Pursue a loan repayment assistance program (LRAP): Although private student loans aren’t eligible for federal forgiveness programs, they may qualify for repayment assistance from your state or a private organization. Most LRAPs are designed for qualified professionals working in high-need or underserved communities. 
• Consider a home equity loan or line of credit (HELOC): Homeowners could tap into their home equity to pay off their student loans. This option could save you money if your home equity loan or HELOC has a lower interest rate than your student loans. However, the risk is that you could lose your home to foreclosure if you can’t repay what you borrow.