A student loan refinance involves replacing one or more student loans with a new loan with better terms from a private lender. Both private and federal student loans can be refinanced. The purpose of refinancing is to get a lower interest rate and thereby reduce the monthly payments and lifetime costs. Many private lenders, including banks, online lenders, and credit unions offer student loan refinance loans. People with federal loans can also consolidate—rather than refinance—their debts. This involves combining multiple federal loans into a single loan with one simple monthly payment. The table below shows a sample of rates for student loan refinances compared to rates for first-time private and federal student loans. The Refinance column shows the lowest rates advertised by each lender. The First-Time Column shows fixed rates for federal government loans and lowest rates from private lenders.
|Refinanced Student Loans||First-Time Student Loans|
|1.99% Var. (with autopay)* Variable / 2.92% (with autopay)* Fixed (Credible)||1.24% Variable / 3.75% fixed (Credible)|
|1.99% (with 0.25% autopay discount) Variable / 2.98% (with 0.25% autopay discount) Fixed (Earnest)||6.6% (Federal Stafford Unsubsidized)|
|1.99% (with autopay) Variable / 2.99% (with autopay) Fixed (SoFi)||5% (Federal Perkins Loan)|
|1.99% Variable / 2.88% Fixed (Splash Financial)||4.236% (Federal (PLUS Loan)|
|2.99% Variable / 3.18% Fixed (CommonBond)||1.44% Variable / 5.45% Fixed (CommonBond)|
|2.61% w/ autopay Variable / 3.19% w/ autopay Fixed (LendKey)||5.05% (Federal Stafford Subsidized Loan)|
As the above table shows, it is often worth refinancing a student loan. If you’ve graduated from college and have built a good credit score, then you can achieve a much lower interest rate by refinancing—and potentially save thousands of dollars in the long run.
Things to take into consideration before refinancing:
|Potential for major savings over life of loan||With longer term, potential to pay more over life of loan|
|Reduced monthly payments||Applying for refinance can affect credit score|
|One single payment makes life easier||By refinancing federal loan, you waive rights to cancellation or forgiveness programs|
|More flexible repayment terms|
|Option of dropping previous co-signer from loan|
Eligibility can vary slightly between lenders, but the following are standard requirements for most refinance loans:
Lenders also look at the following:
A student loan refinance application is similar to other loan or refinance applications. It involves the following steps:
|Greater chance of approval||Co-signer takes on liability for debts|
|Reduced interest rate if co-signer has good credit||Damage to co-signer’s credit score in event of missed payments|
|Flexibility to release co-signer at pre-determined date in future||Potential damage to relationship with co-signer over financial matters|
A co-signer can be a:
If you have private student loans or private and federal loans, refinancing could be the best way to save money. But if you only have federal loans, you may want to consider debt consolidation or any of the federal government’s loan forgiveness or cancellation programs.
If you’re unable to meet the minimum payments, these are just some of the programs for being forgiven all or a portion of your loan amount:
Disclaimers: College Ave Student Loans products are made available through either Firstrust 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.
College Ave Refi Education loans are not currently available to residents of Maine.
(1)The 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.
Information advertised valid as of 04/01/2019. Variable interest rates may increase after consummation.