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Refinancing your student loans can often lower your interest rate, reduce your monthly payment, or help you achieve other goals, like paying your loan off sooner.
Fortunately, both federal and private student loan borrowers have the option to refinance, though it often makes more sense for those with private loans to do so. If you’re considering refinancing your student loans, use this guide to learn more and check out the different scenarios outlined below.
Eligibility requirements for refinancing student loans
To refinance either a federal or a private student loan, you’ll need to choose a private lender. Every lender has its own eligibility requirements, including credit score minimums, debt-to-income ratios, and whether a cosigner is required. Cosigners are common in student loan refinancing and can help you get better terms and rates — especially if your credit score is low.
Though the exact requirements for refinancing will depend on your chosen lender, here’s a look at what refinancing standards generally look like:
- Credit score: Good to excellent (ELFI, for example, requires at least a 680)
- Income: $24,000 or more
- Degree: Associate, undergraduate, or graduate degree
- Types of loans: Private or federal
- Repayment history: Up to date on current loan payments
Shopping around for your loan is always important. It can ensure you find a loan program you qualify for, as well as help you get the most favorable terms possible. You can typically get prequalified for a refinance without a hard credit pull. This prequalification allows you to gauge both your eligibility and the costs of each lender.
For more specific eligibility requirements, you can check out our picks for the best student loan refinance companies.
Can you refinance student loans in these scenarios?
Refinancing can often be a wise move, but it’s not right for everyone — nor is it possible in every scenario. To see if refinancing makes sense in your case, find the scenario most closely related to yours below.
- If you have federal student loans
- If you’ve already consolidated your loans
- If you declared bankruptcy
- If you haven’t graduated yet
- If you don’t have a degree
- If you don’t have a cosigner
- If you have already refinanced before
- If you have defaulted on your student loans
- If you are self-employed
- If you have bad credit
If you have federal student loans
Yes, you can refinance federal student loans, but doing so means switching to a private loan and losing out on all the benefits that come with federal loans. This means income-driven repayment plans and Public Student Loan Forgiveness would no longer be an option. Additionally, you would no longer qualify for the student loan pause set out by the CARES Act or the potential cancellation of some of your loans.
To learn more, check out our guide on refinancing federal student loans.
If you’ve already consolidated your loans
If you previously consolidated your loans (meaning rolled them all into a single loan), you can certainly refinance the loan in the future. If interest rates have dropped since your consolidation, it’s usually a smart idea. Just remember that refinancing a Direct Consolidation Loan would mean losing out on various federal benefits.
To learn more, check out our guide on refinancing student loans after consolidation.
If you declared bankruptcy
If you’ve declared bankruptcy in the last few years, it may be difficult to refinance your student loans. Most lenders are leery of borrowers who have gone bankrupt in the past, so even those that do allow it may have stringent requirements for doing so. You’ll need a strong recent payment history — particularly since filing for bankruptcy — or you may need to be a certain number of years removed from the bankruptcy.
To learn more, check out our guide on refinancing student loans after bankruptcy.
If you haven’t graduated yet
Several lenders will let you refinance your student loans before graduating. This offering is more common with private loans since federal loans don’t require repayment until at least six months after graduation. You might consider refinancing your private loans if interest rates drop or you need a lower monthly payment as you prepare to enter the working world.
To learn more, check out our guide on refinancing student loans before you graduate.
If you don’t have a degree
Though some lenders require you to have an associate’s, bachelor’s, or master’s degree before you can refinance, not all of them do. Citizens Bank, for example, will refinance student loans for those without a degree. It’s just one more reason to shop around and compare lenders before refinancing.
To learn more, check out our guide on refinancing student loans without a degree.
If you don’t have a cosigner
Using a cosigner will depend on your credit and the lender you choose. If your credit is low or you want to get the lowest interest rate possible, adding a cosigner can be a smart idea. If your score is higher or you’re happy with the terms you’re quoted, then a cosigner isn’t necessary — as long as you qualify for the loan.
To learn more, check out our guide on whether you should refinance student loans with a cosigner.
If you have already refinanced before
You can refinance your student loans as many times (and as often) as you’d like. If interest rates have dropped since your last refinance, it can be a particularly smart move that can save you significant money over time. Refinancing again may also be wise if you want to lower your monthly payment, pay off your loan sooner, or release a cosigner from the loan.
To learn more, check out our guide on refinancing student loans more than once.
If you have defaulted on your student loans
Many lenders will not consider your refinance if you’ve previously defaulted on student loans before. For one, the default shows you’re a high-risk borrower and may not repay the money they lend you. Additionally, the default likely impacted your credit score negatively, so you may not qualify for the loan either.
To learn more, check out our guide on refinancing defaulted student loans.
If you are self-employed
You can refinance your student loans if you’re self-employed, but it may be more difficult — especially if your income is inconsistent or hard to prove. Your credit report will play a significant role in qualifying as a self-employed borrower, so make sure yours is clean before applying. You may also need a cosigner in some cases.
To learn more, check out our guide on refinancing student loans when self-employed.
If you have bad credit
You don’t need perfect credit to qualify for a student loan refinance, though lower scores may mean paying a higher interest rate. You also may need a cosigner if you’re unable to meet the lender’s credit score requirements on your own. Remember, credit score standards vary by lender, so be sure to shop around if your credit is questionable.
To learn more, check out our guide on refinancing student loans with bad credit.
Author: Aly Yale