Refinance Graduate Student Loans: A Comprehensive Guide

Are you ready to manage your student loans? Graduate student loan borrowers, especially those with medicine, law, or business degrees, often have more loans than undergraduates, making the debt more difficult to manage.

Refinancing these loans helps simplify your finances so you can enjoy greater flexibility and freedom. In this comprehensive guide, we’ll show you how to refinance your loans, evaluate potential lenders, and address key questions about the refinancing process.

4 top lenders to refinance graduate student loans

Graduate student loan borrowers have distinct needs. For example, those with an advanced degree typically have more student loan debt than undergraduates. 

Studying longer also means entering the workforce later, especially in specialized fields with residency, licensing, and fellowship requirements. Considering these unique circumstances, we’ve found the top lenders for graduate student loan refinancing.

SoFi

Credible

ELFI

Earnest

Our expert’s take

Josh St. Laurent

CFP®

The most common mistake people make when refinancing graduate student loans is not shopping around for preferable rates or companies they enjoy working with. Often, people seek out a friend or get a referral (which is a great start), but not getting at least three quotes is a mistake that can cost you in the long run.

Pros and cons of refinancing graduate student loans

Refinancing graduate student loans comes with both advantages and disadvantages. Understanding these pros and cons can help you decide if refinancing is the right option for you.

Pros

• Single payment

  Refinancing makes it possible to merge multiple loans into one, simplifying payments.

• Pay less interest

  You may be able to lock in lower rates, which can greatly reduce the amount of interest paid over the life of the loan.

• Adjust monthly payments

  When refinancing graduate student loans, you can choose repayment terms between five to 20 years; this allows you to adjust monthly payments up or down depending on your preference. 

Cons

• Loss of federal benefits

  If you refinance federal student loans, you could lose benefits such as forbearance, loan forgiveness, and income-based repayment plans.

• Strict credit requirements

  Refinancing student loans typically requires that you have a good credit score plus a steady income, which may be a challenge for recent graduates.

• Hard credit check

  While you may be able to view initial loan terms with just a soft credit check, lenders will require a hard credit check to apply, which could temporarily lower your credit score.

Am I eligible to refinance my graduate student loans?

To refinance loans, borrowers must have already completed their graduate degree from an accredited school. Payments on already existing student loans must be current; loans that are in default cannot be refinanced. Most lenders require borrowers to be U.S. citizens or permanent residents, but exceptions do exist.

Borrowers must provide evidence of being creditworthy to refinance their loans. Lenders look for stable employment with recurring, verifiable income and a debt-to-income ratio below 50%. You’ll also need a credit score of 650 or higher, though some lenders may make an exception if you have a high income or a cosigner. 

Refinancing graduate student loans isn’t for everyone; you need to check and make sure you meet the eligibility requirements before seriously considering this option. 

What to look for in a graduate student loan refinancing lender

Refinancing graduate student loans requires careful consideration of various factors tailored to your situation. Here’s what to look for when assessing refinancing lenders:

• Interest rates: Look for interest rates that are lower than what your current loans offer. Reduced rates lower monthly payments and overall interest paid on the loan, which is especially beneficial for graduate borrowers with large debt loads.
• Fixed vs. variable rates: Choosing between fixed and variable interest rates is crucial. Fixed rates offer stability, while variable rates fluctuate. Recent grads who are just starting their careers may prefer having fixed rates which make budgeting easier. 
• Loan amounts: As a graduate student, you might carry a higher debt burden. Look for a lender that will refinance larger amounts to align with your needs.
• Loan terms: As a recent graduate, you may want a longer term to make monthly payments more manageable. However, your high earning potential might allow for a shorter repayment term. Look for lenders who offer terms that align with your budget and financial goals.
• Specialty refinancing: Unique needs call for specialized products. Some lenders cater to specific borrowers, such as medical residents or dentists, providing options to reduce payments during residency.

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Our expert’s tip

Josh St. Laurent

CFP®

Make a short list of some of the most important criteria for you using this article as a guide.  Translate this criteria into one or two pointed interview questions when you’re shopping lenders.  Trust your intuition when you’re talking to lenders. If something doesn’t feel right or if they’re overly pushy, move on.

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Can you refinance Grad PLUS loans?

Refinancing federal graduate loans, such as Grad PLUS loans, is possible. As long as you meet the lender’s criteria, most will allow you to refinance Grad PLUS loans into a private student loan. 

However, weigh the following before taking this step:

• You’ll lose federal protections: When you convert federal loans into private loans through refinancing, you forfeit borrower protections unique to federal loans. This includes access to loan forgiveness programs and income-based repayment plans.
• You need stable income: Only pursue refinancing federal loans into private loans if you have a reliable income and feel certain you won’t need federal benefits.
• Consider alternatives to refinancing: If you’re uncertain about the decision to refinance federal graduate loans, federal student loan consolidation may be a more prudent alternative. Student loan consolidation allows you to merge multiple federal loans into one, with an interest rate that is the weighted average of all of the loans you’ve consolidated. It’s similar to refinancing, but you may not achieve the same interest savings level. 

While refinancing Grad PLUS loans is an option, it requires examining your personal financial stability and long-term needs. Losing federal benefits may not be suitable for every borrower, and exploring other paths, including federal consolidation, could be more fitting.

How to refinance graduate school student loans

Refinancing graduate school student loans can provide financial benefits and flexibility but requires a careful approach. Knowing the process and considering your unique situation as a graduate student borrower ensures that refinancing aligns with your financial goals. 

Here’s a step-by-step guide. 

By following these steps and focusing on the unique elements of graduate school student loans, you can tailor your refinancing experience and even save a significant amount over the life of your loan.

FAQ

Will refinancing hurt my credit score? 

Prequalifying with lenders using a soft credit pull won’t hurt your credit score. A hard credit inquiry during the application process may lower your score by a few points, but responsibly managing the new loan can raise your credit score over time.

What factors determine my refinancing rate? 

Your interest rate depends on factors such as your credit score, income, debt-to-income ratio, and the lender’s terms. It’s wise to compare offers from different lenders to find the best rate for your graduate student loan refinancing.

Can I refinance my loans more than once? 

Yes, you can refinance graduate student loans multiple times if it benefits your financial situation. Consider changes in interest rates and potential costs to determine whether multiple refinances are advantageous.

What happens if I have trouble repaying my refinanced loan? 

Some lenders offer forbearance or other temporary hardship options. Always communicate with your lender if you experience difficulty repaying, and understand the lender’s policies before refinancing.

Should I consolidate or refinance my graduate student loans? 

Consolidation combines federal loans into one, possibly with a lower payment but not necessarily a lower interest rate. Refinancing can consolidate federal and private loans with the potential for a lower interest rate but may involve losing federal protections.

Do I need a cosigner to refinance my graduate student loans?

A cosigner is not always required. However, one might improve your chances if you have a lower credit score. Each lender has different criteria, so exploring your options and understanding each lender’s requirements is wise.

How we chose the best companies to refinance graduate student loans

LendEDU evaluates student loan companies to help readers find the best options for refinancing student loans. Our latest analysis reviewed 696 data points from 24 lenders and financial institutions, with 29 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of the best lenders to refinance graduate student loans