Best Refinance Student Loans

Refinancing your student loans may land you a lower interest rate and a smaller monthly payment. But if you have federal student loans, refinancing comes with downsides you should consider. You’ll also need to research student loan companies and their terms to find the best deal.

Bankrate’s ranking of the best student loan refinancing companies compares rates, terms, features and more to help you start your search for a lender. The resources below can also help you explore whether refinancing is right for you

How to refinance student loans

If you’re considering refinancing your student loans, here’s how to start the process:

Check your credit score.

Many lenders require good credit for you to refinance your loans. If you see that your credit score is on the low side (below 650), you can take steps to improve it or look for a qualified co-signer.

Shop around.

Whether you’re refinancing federal or private student loans, one of the most important steps is shopping around. Check with multiple lenders and research student loan refinancing rates to ensure you get the best deal possible.

Choose a loan offer.

Lenders that approve you should offer you several repayment options, which will impact your monthly payment and how much you pay on your loan overall. Select a loan offer that matches your budget and goals.

Send in an application.

While some lenders will let you check rates using a simple application form, you’ll eventually need to submit a full application. You’ll need details about your existing loans, plus documents verifying your income and other financial details. At this point, you’ll go through a hard credit inquiry. Once your details have been verified, the lender will either pay off your former loans or send you the funds directly. Payments begin as soon as funds are disbursed.

What is student loan refinancing?

Student loan refinancing is the process of taking out a new loan to pay off your existing student loans. When you refinance your student loans, you may qualify for a lower interest rate and a different repayment timeline, which could help you save money on interest or lower your monthly payments.

Refinancing is a good idea for people with a large monthly payment or a high interest rate, since refinancing into new terms can make loans more affordable in both the short- and long term. Borrowers with good credit, in particular, will qualify for the best rates and terms. You can refinance both federal and private student loans, though it’s usually best to avoid refinancing federal loans, since they come with a number of perks that aren’t available through private lenders.

Should I refinance my student loans?

Refinancing your student loans makes financial sense only if the loan you apply for has a lower interest rate than the current interest rate of your student loans. You can use a loan calculator to determine your current monthly payment versus that of the loan you’re considering. While you may decide to refinance to a longer term to lower your monthly payments, keep in mind that both a longer term and a higher interest rate will increase the cost of your loan overall.

Whether or not you should refinance also depends on what type of loans you have. Refinancing could be smart if you have private loans, but you’ll lose benefits if you refinance federal loans. These benefits include:

Income-driven repayment plans.

Loan forgiveness programs.

Deferment and forbearance options.

Waived interest and payments until Dec. 31, 2022.

Eligibility for up to $20,000 in one-time loan forgiveness if your loans were disbursed before June 30, 2022.