Refinancing student loans can be a smart way to make repaying your education debt more affordable. Refinancing means a new loan pays off existing student loans. It could lower your monthly payments, reduce your interest rates, and lower the total cost of your student debt.
You should carefully consider your motivations before refinancing. You should also calculate the total costs of your new refinance loan, including any origination fees, interest rates, prepayment penalties, and new loan terms, as well as any borrower protections you would give up.
This guide will walk you through how to refinance student loans and help you decide whether refinancing is right for you.
How to refinance student loans in 5 steps:
- 1. Ask yourself what you want to accomplish
- 2. Gather quotes from multiple lenders
- 3. Choose the loan that’s best for you
- 4. Gather your documentation, and submit a full application
- 5. Wait for approval
- Frequently asked questions
1. Ask yourself what you want to accomplish
If you’re thinking about refinancing your student loans, the first step is to understand what exactly refinancing will do for you. You also need to know whether you are a good candidate for refinancing your student debt.
Refinancing could reduce your interest rate, lower your monthly payments, or both. But each may be right for borrowers in very different situations.
Lowering your interest rate
Your student loan interest rate determines how expensive it is for you to borrow. Getting a new refinance loan with a lower interest rate can make your student loan debt cost less—provided you don’t extend the repayment term a lot and end up paying interest for a longer amount time.
To lower your interest rate by refinancing, you need to qualify for a new loan at a better rate than you’re currently paying. Usually, this would be possible only if your financial situation has changed or interest rates have gone down since you initially borrowed.
If you’ve paid down credit card debt, have more income, or have improved your credit score, you can hopefully get a loan at a lower rate. Check your credit score before refinancing to see whether you should take steps to increase it, such as paying off other debts, before applying for student loan refinancing.
If your credit score isn’t great or you otherwise aren’t an ideal candidate, you could also consider asking a cosigner to guarantee the loan. This could help you qualify for more affordable financing.
>> Read more: How to Lower Your Student Loan Interest Rate
Lowering your monthly payment
If you are struggling to make your current minimum student loan payments, you may consider refinancing to lower your student loan payment. You can do this if you refinance to a loan with a longer repayment period, which would divide your outstanding debt across more monthly payments.
Unfortunately, taking out a loan with a longer repayment term will increase your total borrowing costs in most cases, because you’ll pay interest for a longer amount of time. However, this could make sense for private loans if you can’t afford your monthly payment.
A note about federal loans
You can refinance your federal loans with a private student loan lender. Sometimes that makes sense, especially if you can find a loan at a lower fixed rate and expect a stable income that will let you budget for student loan repayment in the coming years.
However, you’ll give up borrower protections if you refinance federal student loans with a private lender. These include student loan forgiveness programs, income-driven repayment plans, and deferment and forbearance policies that let you pause payments.
To consolidate your federal student loans without giving up borrower protections, consider a Direct Consolidation Loan from the Department of Education instead of private refinancing.
Your effective interest rate won’t change, but this will simplify your monthly payments, and it could give you options for more affordable payment plans down the road if you run into financial trouble.
2. Gather quotes from multiple lenders
Once you know what you’re hoping to do with your refinance loan, it’s time to get quotes from lenders. Loan rates and terms can vary from one lender to another, and you want to make sure you get the most affordable loan overall.
With most lenders or marketplaces, you’ll incur only a soft credit check when requesting a quote. This means the lender will check your credit history, but you won’t get a mark on your credit report that could affect your credit score.
You’ll need to provide some basic information to get quotes from lenders, including:
- The loan amount you want to borrow
- Your Social Security number or an estimation of your credit score
- Your income
Also check with your student loan servicer to learn all your repayment options before making a decision.
Here are some refinance lenders worth considering:
Compare Student Loan Refinance Companies

- Rates from 1.99% to 5.89% APR
- Pick your payment and loan term
- Ability to remove your cosigner

- Rates from 2.39% to 6.01% APR
- Get personalized rates in minutes, without affecting your credit score
- Transfer Parent PLUS Loans to a child

- Rates from 1.99% to 8.49% APR
- A cosigner can be released after 36 consecutive on-time payments
- Need at least $10,000 in student loans to refinance
>> Read more: Best Student Loan Refinance Companies
3. Choose the loan that’s best for you
After you have received quotes from at least three lenders, compare them to find the interest rate and repayment term that will help you achieve your priorities set in step one. This could mean choosing a lender with a long repayment timeline or the lowest rate.
As you compare lenders, also consider the lender’s reputation for customer service, as well as whether it provides options for forbearance, missed payment forgiveness, or cosigner release.
Some lenders offer additional special benefits. SoFi, for example, provides career counseling and discounts for borrowers who have multiple loan products with the company. You can learn more in our full SoFi Student Loan Refinancing Review.
4. Gather your documentation, and submit a full application
After you’ve picked a lender based on the quotes you received during the pre-approval process, it’s time to submit a full application.
The lender will perform a hard inquiry when you apply for a loan, so be sure to submit an application only with the lender you’ve chosen to avoid hurting your credit score with several marks on your credit report.
Typically, lenders will require financial information for both you and your cosigner if you have one, including:
- Pay stubs, tax returns, or other proof of income
- Details about loans you’re paying off
- Your Social Security number for a credit check
5. Wait for approval
Lenders take different amounts of time to review and approve refinance loan applications. As you wait for your loan to be approved, keep up with your student loan payments to avoid delinquency or fees.
After you’ve been approved, ask your new loan servicer if they offer any discounts.
For example, many lenders offer an autopay discount—a 0.25 percentage point interest rate reduction if you set up automatic monthly payments—and some offer discounts after a set number of on-time payments.
Frequently asked questions
Now you know the basic steps involved in refinancing a loan, but you still may have some questions about the process. Here are answers to some common questions about student loan refinancing.
Typically, it makes sense to think about refinancing student loans once you have left school, landed a job, and have at least six months of stable income. This way lenders will consider you a well-qualified borrower and will be more likely to offer you favorable loan terms.
>> Read more: How to Decide if You Should Refinance Student Loans
Refinancing can have the effect of consolidating student loans if you use one new loan to repay multiple private or federal loans.
However, the Department of Education refers to student loan consolidation as a specific type of Direct Consolidation Loan that’s available only through the government. Only federal loans can be consolidated this way. Your effective interest rate won’t change, although repayment options can.
You can learn more in our Guide to Refinancing vs. Consolidating Student Loans.
Refinancing options from private lenders could offer fixed-rate or variable-rate loans.
Fixed-rate loans are predictable. The rate never changes, and your payment stays the same for the life of the loan, so you’ll know your total costs upfront. If you prefer this certainty or plan to take the entire term to pay off your loan, opt for a fixed-rate loan.
Variable-rate loans typically start with low interest rates compared to fixed-rate loans, but the rate can change with the market. You face more risk with a variable interest rate, but a variable-rate loan can make sense if you plan to repay ahead of schedule because it can be cheaper upfront.
Still have questions?
Sometimes knowing which path to take is difficult. Here are a couple of additional resources on student loan refinancing and consolidation that may be useful: