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Student Loans Student Loan Repayment

Can You Refinance Student Loans?

Updated Sep 15, 2023   |   9-min read

Many borrowers are drawn to the prospect of refinancing their student loans—often to lower their interest rates or change the terms of their loan. It’s a path that might make managing payments more feasible.

But the question of refinancing isn’t straightforward. Whether you can refinance depends on various factors, including your loan type, your financial situation, and more. Keep reading for a breakdown of these criteria and help assessing whether refinancing is a suitable option.

In this guide:

Are you eligible to refinance your student loans?

Beyond deciding to refinance your student loans, you must meet specific eligibility criteria. Different lenders have unique requirements, but here are several factors to consider:

Credit score requirements

Your credit score plays a vital role in eligibility. Lenders’ credit requirements vary, but we’ve collected those from four of our top lenders:

LenderLendEDU designationEditorial ratingMinimum credit score
SoFiBest online lender for student loan refinance4.9650
EarnestBest refinance skip-a-payment benefit4.8650
ELFIBest personalized support for student loan refinance4.8680 and at least 36 months of credit history
Nelnet BankBest refinance term lengths4.2650

Income stability

Lenders look for stable income to ensure you can manage payments. Your chosen lender might want a consistent employment history or a steady income from your business. Many lenders we’ve researched don’t disclose a minimum income requirement. 

Self-employed borrowers can struggle providing this income verification. Find out more about refinancing if you’re self-employed below.

Degree

Did you graduate? Some lenders may only refinance loans for graduates, while others might be more flexible. Read more about refinancing without a degree below.

Do you have private or federal student loans?

It will help to know whether your loans are from the U.S. government (via a federal loan servicer) or a private lender. If you’re unsure who owns your loans or what type you have, review your account statements or contact your servicer.

Can you refinance private student loans?

Refinancing private student loans tends to be more straightforward. Various lenders offer this service, and the decision often depends on factors including your credit score, income, and degree status.

Can you refinance federal student loans?

Federal student loans can be more complex to refinance. Instead of refinancing with a private lender, you might consider a Direct Consolidation Loan, which combines multiple federal loans into one. 

It’s crucial to understand refinancing federal loans with a private lender could lead to losing federal benefits, such as eligibility for income-driven repayment plans, Public Service Loan Forgiveness, and deferment or forbearance options.

Other factors to consider

  • Citizenship status: Many lenders require U.S. citizenship or permanent residency.
  • State of residence: Lending laws vary by state, and several lenders are only available in select states, so your location may influence eligibility.

Can you refinance your student loans in the following scenarios?

Whether you should refinance depends on your personal financial situation, goals, and loan type. Understanding these factors can guide your decision. 

If one of the scenarios in the table below applies to you, click it to drop down to a section that explains it in more detail.

ScenarioCan you refinance?
After consolidationYes
After bankruptcyPossibly, with conditions
Before you graduatePossibly, with conditions
Without a degreePossibly, with conditions
You have federal student loansWith caution
After you’ve already refinancedYes
You have defaulted student loansUnlikely
When self-employedYes, with stable income
With bad creditPossibly, with cosigner
You don’t have a cosignerPossibly, depending your credit and the lender

Can you refinance student loans after consolidation?

Yes, you can refinance after consolidating your student loans—i.e., rolling them all into one loan. It may lead to better terms and rates, but be aware you stand to lose federal benefits if you refinance a federal Direct Consolidation Loan with a private lender. 

Can you refinance student loans after bankruptcy?

Refinancing after bankruptcy might be challenging but not impossible. Many lenders are cautious about borrowers with past bankruptcy; even those that permit refinancing may enforce strict requirements. 

You’ll likely need a robust recent payment history, or you may have to wait several years after the bankruptcy is finalized. Adding a cosigner to your refinance loan could increase your chances of approval.

Can you refinance student loans before you graduate?

If interest rates decrease or you desire a more manageable monthly payment while transitioning into the workforce, you might consider refinancing your loans. Many lenders prefer graduates, but some might refinance your loans before graduating if you meet certain requirements. 

This is often more prevalent with private loans because most federal loans don’t require repayment until at least six months postgraduation. 

Can you refinance student loans without a degree?

Many lenders require an associate, bachelor’s, or master’s degree to refinance, but it isn’t a universal requirement. 

Refinancing without a degree is possible with certain lenders if you meet other eligibility criteria. Citizens Bank, PNC, and Discover are willing to refinance student loans for borrowers who didn’t graduate.

Should you refinance federal student loans?

Refinancing federal student loans requires careful consideration because it will lead to losing federal benefits. If you’re in a stable financial position with no anticipated changes and have a solid credit score that qualifies you for the most favorable rates, refinancing could be a viable way to save money.

But if your income is inconsistent or job security is a concern, refinancing federal student loans may be unwise. We don’t recommend refinancing if you might want to use student loan forgiveness programs or extended repayment options.

Can you refinance student loans more than once?

Yes, you can refinance student loans multiple times and as often as you wish. If interest rates have declined since your last refinance, this can help you save a substantial amount over the long term. 

Refinancing again might also be sensible if you aim to reduce your monthly payment, settle your loan earlier, or relieve a cosigner from the loan obligation.

Can you refinance defaulted student loans?

Most lenders are unwilling to refinance defaulted student loans because it indicates you’re a high-risk borrower, suggesting you might not repay the money. Also, the default has likely lowered your credit score, which could prevent you from qualifying for the loan.

Can you refinance student loans when self-employed?

Self-employed borrowers can refinance if they demonstrate stable income and meet other lender requirements. It might be more challenging if your income is erratic or difficult to verify. 

Your credit report is vital in determining eligibility as a self-employed borrower, so ensure it’s in good shape before applying. In some situations, you may need a cosigner.

How to refinance student loans with bad credit

Refinancing with bad credit might be challenging, but a cosigner could increase your chances. You don’t need perfect credit; however, a lower score might lead to higher interest rates. Credit score criteria can differ among lenders, so it’s wise to explore various options if your credit is less than ideal.

Should you refinance student loans if you don’t have a cosigner?

The need for a cosigner hinges on your credit score and the lender’s requirements. If your credit is not up to par, or you’re aiming for the lowest interest rate, a cosigner might be prudent. 

But you might not need a cosigner if your credit score is satisfactory and you’re content with the loan terms offered.

Ask the expert: What are common misconceptions or mistakes borrowers make when considering refinancing their student loans? How can they be avoided? 

Erin Kinkade, CFP®

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Not understanding the full picture—such as fees and the impact of a longer term, increasing interest paid over time—and refinancing from federal to private loans without considering the features federal loans offer if you experience job loss or a decrease in income are all common mistakes borrowers make. You can avoid these pitfalls by carefully making the decision to refinance—not making it in haste without doing research and talking with the lenders and trusted advisors.

Pros and cons of refinancing

Considering refinancing your student loans now that you’ve confirmed you might be eligible? It’s essential to weigh the potential benefits against the possible drawbacks. Here’s a breakdown to help you make an informed decision.

Pros

  • Lower interest rates

    You might secure a lower rate, saving you money over the life of the loan.

  • Change in loan term

    Adjusting the term might align better with your financial goals.

  • Consolidation of loans

    Combining multiple loans into one can simplify your payments.

Cons

  • Loss of federal loan protections

    Refinancing federal loans with a private lender could mean losing benefits, such as income-driven repayment plans.

  • Potential costs and fees

    Some lenders might charge fees for refinancing, increasing your overall costs.

  • Impact on credit score

    The process might lower your credit score by a few points due to the credit check involved.

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Because you lose federal protections and benefits if you refinance your federal student loans with a private lender, I only recommend doing so if you have a stable income and a full emergency fund—six months’ worth of expenses—and interest rates are more favorable.

  • Erin Kinkade, CFP®

Alternatives to refinancing

Before refinancing, it’s worth exploring other options that might better suit your needs. These alternatives can offer solutions tailored to your financial situation and the type of loans you have. 

Here’s a closer look at what you might consider instead of, or in addition to, refinancing.

Direct Consolidation Loan

A Direct Consolidation Loan allows you to combine multiple federal loans into one loan with a fixed interest rate. This applies only to federal loans, offering a simplified payment plan without losing federal benefits.

Federal loan forgiveness programs

For federal loans, forgiveness programs might be a more suitable option. Programs such as Public Service Loan Forgiveness (PSLF) can eliminate your remaining loan balance if you meet specific requirements—e.g., working in a qualifying public service job.

Income-driven repayment plans

Income-driven repayment plans adjust your monthly payments based on your income and family size. This option is available for federal loans and might be a flexible alternative to refinancing for those with fluctuating income.

Deferment and forbearance

Deferment and forbearance are temporary relief options that allow you to pause payments. These can apply to federal and private loans, but terms may vary. Consider these if you need short-term financial breathing room.

If refinancing is the right choice for you, explore our comprehensive guide to refinance to discover the steps involved.

Refinancing FAQ

Navigating the refinancing landscape can be complex. Below, you’ll find answers to several frequent questions that might be on your mind as you consider whether refinancing is right for you.

What are the minimum credit score and income requirements for refinancing student loans?

The minimum credit score for refinancing varies by lender, but many fall in the range of 650 to 680. Income requirements also differ because lenders assess your debt-to-income ratio and job stability. Always check with lenders to understand their criteria.

Can I refinance federal and private student loans together, and what are the differences?

Yes, you can refinance federal and private student loans together. Doing so means losing federal protections and benefits. 

Private loans tend to be more rigid in terms and conditions; federal loans offer more flexibility in repayment and forgiveness options. Evaluate the trade-offs before proceeding.

How does refinancing affect my credit score in the short and long term?

In the short term, refinancing can cause a small dip in your credit score due to the lender’s credit check. Long term, consistent on-time payments after refinancing can help raise your credit score. 

The effect on your credit will depend on various factors, including the terms of the new loan and your payment history.