Student loan refinancing is the process of getting a new, more affordable loan to pay off all or part of your existing student loans. Refinancing can be a great option for you if your current interest rate is high and if you want to consolidate your student loans.
Student Loan Interest Rate Refinance
NerdWallet’s student loan refinancing calculator
To use the calculator, you’ll need to provide your name, address and phone number. Then you’ll be asked for information about your current student loans: the type of loan, its balance and whether it’s a federal or private loan. You must also supply information about any other debts you have. The calculator will ask if you are planning to use a cosigner (a person who signs on as a joint borrower) or if your spouse’s income will help lower payments—and if so how much money they make per month. Once that’s out of the way, it’s time to select some refinancing lenders and compare their rates!
The top left-hand side of this screen displays all of your options when comparing refinancing lenders — including their monthly payment amount (in green), annual percentage rate (APR) (red), origination fee (%) among other things such as their minimum credit score requirement or length of time before interest begins accruing on a fixed rate option versus an adjustable rate option. We recommend looking at these three things separately when deciding which lender is best for you:
Get your credit score
In order to get a loan, you will need to have a strong credit score. Unfortunately, many people do not know what their credit score is and do not have any idea how they can improve it. If you want to lower your interest rate on your student loan and refinance it into a lower rate, having good or excellent credit is important. If you don’t pay off your debt in full each month or if you make late payments, then this could negatively impact your ability to refinance at all.
One way that someone can check their own credit score for free is by signing up for Credit Sesame here: https://www.creditsesame.com/credit-score/. The site allows users access to their Experian® TransUnion® VantageScore® three times per year and provides actionable financial advice based on the information from the bureau reports issued by these two agencies (Equifax®, Experian®, TransUnion®). In addition, this site offers an option where users can purchase an additional copy of their TransUnion VantageScore as well as other services such as identity theft protection or monitoring service through Lifelock™
If someone has never checked their own score before or only recently had done so then there are some things they should know before proceeding forward with any type of application process:
Compare rates and apply
- Compare rates and apply. Once you’ve found the best student loan refinance options, it’s time to compare their rates. You can do this by using NerdWallet’s student-loan refinancing calculator.
- Get your credit score. To see if you have good enough credit for a lower interest rate, you must first get your current FICO score from one of the major credit bureaus (Transunion, Equifax or Experian). This will let you know where you stand in terms of qualifying for a loan at all — most lenders require that applicants have at least a 650 FICO score before they will consider them for an auto or personal loan. If yours is below 650, try these steps to improve it:
How to choose a refinance lender
- Look for a lender that offers a variety of loan types.
- Look for a lender that offers low rates and fees, as well as flexible repayment options.
- Look for a lender that offers a streamlined application process, with clear and concise information about the different loan types you’re considering and how they work in your situation (including estimated monthly payments).
- Look for a lender that offers good customer service experience, including an easy way to contact them by phone or email if you have questions or concerns throughout the application process or after receiving your loan documents
Refinancing a Parent PLUS loan
If you’re a parent who is paying for your child’s college education, you may be able to refinance your Parent PLUS loan.
- Refinancing a Parent PLUS loan without a cosigner
If you are looking to refinance the federal student loans that you took out on behalf of your child, but would prefer not to have anyone else cosign with you on the loan, this option is available. However, it requires being able to prove eligibility for refinancing without any additional help from another party.
- Refinancing with a co-signer (if eligible)
If none of the above options apply and there’s still some kind of credit issue preventing you from being approved for refinancing through Navient or another lender directly – whether it’s due to poor credit history or other factors – then we recommend working with a third party service provider like SoFi that can get things moving quickly while keeping costs down at the same time.
Is it a good idea to refinance my federal student loans?
If you’re currently paying off student loans, it can be tempting to refinance them. But before you jump into this decision, it’s important to consider whether or not refinancing makes sense for your individual financial situation—and whether or not it will really save you money.
If you can get a lower rate on your federal student loans by refinancing them into private loans with another lender, then yes: refinancing is likely worth it. Refinancing federal loans will give you access to better variable and fixed interest rates if they are available in the marketplace at that time. However, if the current market indicates that there are no good variable rates available at all (which was true in August 2018), then refinancing may not make sense because there is no way for you to improve upon your existing rate.
How to lower your student loan payments without refinancing
If you’re facing a high monthly student loan payment, there are ways to lower your payments without refinancing.
- Use a student loan consolidation loan.
- Apply for a student loan repayment plan or other discharge option.
- Apply for federal income-driven repayment plans and federal forgiveness programs if eligible (PLUS loans only).
- Apply for forbearance when you can’t afford the payments due to an unforeseen circumstance, such as losing your job or experiencing high medical expenses.
- Apply for deferment if you’re enrolled in college at least half time, on active military duty during wartime or national emergency conditions that affect higher education institutions as determined by the Secretary of Education, enrolled in graduate school at least half time (PLUS loans only), or engaged in another specified activity that is not full-time employment but is economically significant when taken into consideration with other activities at the same time (FFELP).
Refinancing is one of the best ways to save on your student loan debt. Make sure you shop around for the best deal.
Student loan refinancing is one of the best ways to save money on your student loan debt. By consolidating all your federal loans into one loan with a lower interest rate, you can save money over the life of your loan.
Refinancing may be right for you if:
- Your current interest rate is higher than 5%
- You want to combine multiple private loans into a single federal consolidation loan with a lower interest rate
Student loan refinancing is a great way to save on your student loan debt. But it’s not for everyone. If you think that a refinance could benefit you, make sure to do some research first so that you know what kind of repayment options are available and how much it will cost in terms of fees and interest rates before applying for refinancing.