Nothing is more exciting than finding out you’ve been accepted to college. Almost immediately visions of achieving your dreams being to form. Unfortunately, shortly after the excitement of getting into your dream school, the realities of paying for college begin to settle in.
For many students, paying for college means student loans. The largest provider of student loans is the U.S. Department of Education. After students complete the government form called a FAFSA® (Free Application for Financial Student Aid) to determine financial aid options, many accept the federal student loan offered.
The interest rates on federal student loans are non-negotiable, as they are set by Congress. Students have no alternative but to accept whatever rate is approved for each school year they borrow (students repeat the borrowing process for each year they attend school). Upon graduation from college (plus a 6-month grace period period) the first monthly student loan payments become due.
If not paid attention to carefully, a federal student loan borrower can be caught off guard by just how much debt has accumulated while pursuing an education. If you find that this is you, don’t fret, there are options such as income-driven repayment, student loan forgiveness, loan consolidation or even refinancing.
Best Student Loan Refinance Lenders
College Ave Student Loans
- Variable rate range: 5.99% – 11.99% APR1
- Fixed rate range: 5.99% – 11.99% APR1
- No application or prepayment fees
- Apply in 3 minutes or less for instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a refi borrower who selects the Full Principal & Interest Repayment Option with a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $250,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
ELFI Student Loan Refinance
- Customers are saving an average of $309 every month and an average of $20,936 in total savings after refinancing their student loans with Education Loan Finance1
- Variable and fixed rates starting from 5.03% APR and 5.08% APR2
- Prequalify in as little as two minutes
- Award winning customer service from your dedicated Student Loan Advisor who is matched to you from the moment you sign up
1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 8/16/2016 and 10/25/2018. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.
2Rates accurate as of 06/01/23. The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. To qualify for refinancing or student loan consolidation through Education Loan Finance, you must have at least $10,000 in qualified student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
SoFi Student Loans
- Rates as low as 5.09% variable and 4.49% fixed1
- No fees or prepayment penalties
- Unemployment protection
1Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
Splash Financial Refinance Loan
- Rates as low as 4.74%1 Variable APR and 4.96%1 Fixed APR
- No pre-payment penalties, origination, or application fees
- See rates in 3 minutes without affecting your credit score2
1The rates displayed may include a 0.25% autopay discount.
2To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Earnest Student Loan Refinancing
- Variable rates starting at 5.32% APR (including 0.25% Auto Pay discount)*
- Fixed rates starting at 4.96% APR (including 0.25% Auto Pay discount)*
- Choose your own monthly payment
- No fees of any kind and exceptional customer service for the life of your loan
- Check your rate in under 2 minutes
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.57% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
*Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. Not all borrowers will qualify for our lowest rates, and your rate will be based on creditworthiness at time of application.
The information provided on this page is updated as of 06/01/2023. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.
What is Student Loan Refinancing
Student loan refinancing is when you take your loan(s) and go to a private lender to change the terms of your loan and/or lower your interest rate. Effectively, you will borrow the same amount you owe (to be used to pay off your existing loans) with the new loan offering potentially more favorable terms, such a lower interest rate or lower monthly payments due to a longer repayment period.
You may opt for student loan refinancing for a variety of reasons. You may simply want to save money. With the given rates by the government at the time of your schooling, you may find that the market is offering more favorable rates now that will translate into quite a bit of savings over the life of your loan.
If you find your struggling to make your student loans payments and want to act while your credit is still good, a student loan refinance might be just the solution. Changing the repayment terms by lengthening the life of the loan could lower your payments and make them more manageable preserving your credit score and the credit you’ve worked hard to build up to this point.
To be clear, the federal government is not a private lender and will not “refinance” your federal student loans. Going this route will move your loans from the protections and benefits offered by the Department of Education and move them to a private lender, making them now private student loans.
The federal government while not budging on interest rates, does offer you a number of options if you find yourself struggling with your loans. These include income-driven repayment plans, Public Service Loan Forgiveness (PSLF) and Federal Direct Consolidation loans.
U.S. Department of Education Options for Federal Student Loans
Income-Driven Repayment Plans
The federal government offers 4 different Income-Driven Repayment Plans. These plans adjust your monthly payment to be more manageable based upon your gross income, family size and expenses for eligible federal student loans. The amount you pay will be 10-15% of your discretionary income. Each year you would recertify your information which could result in an even lower payment or a possible increase, if you’ve had changes to your financial situation, which could include a rise in income, the addition of a child, or marriage.
Public Service Loan Forgiveness
Public Service Loan Forgiveness is a government run program that will forgive the remainder of your Direct Loans after you’ve met certain requirements. These requirements include working for an eligible employer (U.S. federal, state, local, or tribal government for non-for-profit organization) while you make 120 qualifying monthly payments in an eligible repayment plan.
The standard federal student loan will have a 10-year repayment term, so to take full advantage of this program, you must repay under an income-driven repayment plan, such that you can have a balance at the end of the 120 payments to be forgiven.
Federal Direct Consolidation Loan
The U.S. Department of Education has a solution called Federal Direct Consolidation Loan. They will take all your loans and consolidate them into one single loan with one single payment. The interest on this new single loan will be the weighted average of all the loans to be added and rounded up to the nearest 1/8th percent. This will simplify the repayment process and could (in rare cases) reduce your total monthly amount due if the sum of the individual minimum monthly payments is more than the new single payment (with minimum monthly payments being at least $50 in for standard loans)
You can consolidate your loans, depending on your total outstanding education debt, you may be able to take up to 30 years to repay them if necessary, also allowing for your payments to be reduced. However, keep in the mind the longer you pay, the more you also pay in interest, making the total cost of your loan even more.
What it Means to Refinance a Federal Student Loan
As mentioned earlier, should you decide to “refinance” your federal student loan(s), you will be taking them out of the federal loan program and moving them to a private lender. This will cause you to lose any benefits you had under the federal loan program such as, multiple repayment options, loan forgiveness, deferment and other financial hardship solutions.
These benefits proved quite valuable recently when the federal government deferred all federally-held student loans during the COVID pandemic. Students (regardless of financial need or hardship) with qualifying loans were able to skip payments for nearly 2 years (without accruing interest) while other federal borrowers and private student loan borrowers were required to make payments, and if they were approved to postpone payments interest was still accruing.
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New Monthly Payments:
This calculator is provided for informational purposes only. Calculated results are based on many factors, including the assumptions provided by the user. We cannot and do not provide any guarantees, conditions or warranties as to result accuracy or applicability to the user’s particular circumstances. It is the responsibility of the user to verify that all of the output and resulting calculations are correct. This calculator should not be used by anyone to make material financial decisions and should be used solely for informational purposes. Actual terms will be set by your lender or your school. We encourage any user to seek personalized advice from qualified professionals regarding all personal finance issues. The results of this calculator are not based on any information provided by or an affiliation with any school.
When to Refinance a Federal Student Loan
This leaves the question, when should you refinance your federal student loan? The answer to this depends on your needs. If you think you are going to need the protections for financial hardship or you could qualify for PSLF, it’s probably not a good idea to take your loans out of the federal program.
However, if you feel financially stable, have good to excellent credit and the market is in a good place offering low interest rates, then it might just be time to refinance those loans and save some money. Shop around and secure a new interest rate that will save you money over the life of your loan.
Additionally, if you are struggling to make payments and are looking to change your terms AND save money so you are not paying more in the long term, a student loan refinance also might be the right solution for you. While you can modify your monthly payments down with a Direct Consolidation Loan from the federal government you will eventually pay more over time. If you are a qualified candidate, a student loan refinance with a private lender can offer you that lower payment (due to a lower interest rate) without extending the repayment period by too much, effectively costing you less in the long run.