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The Best Student Loan Refinancing Lenders of July 2022

A photo to accompany a story about the best student loan refinancing lenders Getty Images/Rattanakun Thongbun / EyeEm/John M Lund Photography Inc
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When the federal student loan payment freeze ends at the end of January 2022, more than 20 million borrowers who were affected by the student loan debt relief offered by the CARES act will need to start making payments again. 

For many borrowers, the opportunity to lower their monthly payment or interest rate via a refinance can be appealing. But if you have federal student loans, there’s an important caveat to be aware of — refinancing federal student loans will make them ineligible for any current or future federal loan benefits. Because of this, many experts recommend against refinancing your federal student loans. 

Refinancing private student loans, on the other hand, comes with fewer drawbacks. Federal student loans make up the majority of the debt, while private student loans account for 8.4% of the total outstanding student loan debt in the country, according to the Education Data Initiative. Refinancing a private student loan to get a lower interest rate could save you money in the long run and help you pay off your debt faster. However, you should still do your research and consider your own financial situation and goals before committing to a refinance. 

Here’s what you need to know about the top student loan refinancing lenders on the market, and how to decide if a refinance is right for you.  

What Is Student Loan Refinancing?

As with a mortgage, refinancing a student loan involves replacing your current loan or loans with a new one.

“When we use the term ‘refinancing’ we’re referring to a private loan program to take out a new loan to pay off existing loans,” says Adam S. Minsky, an attorney based in Boston who focuses on helping student loan borrowers. 

There are two main reasons to refinance your student loans: to lower your interest rate and to consolidate multiple loans into one. 

If you have multiple loans and refinance to a single loan with a new lender, you would now only have one monthly payment to keep track of instead of several. Additionally, Minsky points out, you potentially end up with a lower interest rate, which can save you hundreds — or even thousands — of dollars over the life of your loan.

Student Loan Refinancing vs. Consolidation

It’s important to note that there are no refinancing options for federal student loans, Minsky explains. When you refinance federal student loans, what you’re actually doing is taking out a new private student loan and using that money to pay off your federal loans. In doing so, you’ll essentially be converting your federal loans into a private loan and lose any benefits — such as forbearance and loan forgiveness options — that come with federal loans. 

If you want to maintain your federal loans — and the benefits that come with them — you need to apply for a federal direct consolidation loan, says Zina Kumok, a personal finance expert and money coach at ConsciousCoins.com. There is no fee to apply for a federal direct consolidation loan, and the interest rate will be the weighted average of the interest rates on the loans you’re consolidating, rounded up to the nearest 0.125%. You can apply online through the official Federal Student Aid website or by mail. 

For those who have both private and federal loans, it might make sense to complete both processes, Kumok says. Consider refinancing private loans and consolidating federal loans separately. This way, you could consolidate your debt and potentially get a lower interest rate on your private loans, all while maintaining your federal loan benefits. 

When Should You Consider Refinancing?

In general, you should consider refinancing if you have a private student loan and can get a refinance with an interest rate significantly lower than your current rate. However, you should also consider non-rate factors — such as the opportunity to change the loan term or the convenience of consolidating multiple loans into one — as well as your personal financial goals and situation.  

“It can make sense to refinance private loans, since they’re already private. For federal loans, even if you get a better interest rate, it might not make sense to give up those benefits,” Minsky says. 

By refinancing private student loans, though, you’re typically not giving up much, so the potential to get a lower interest rate from a new lender may be worth it. And, Kumok points out, a lower monthly payment could free you up to put more money towards other financial goals. 

“How much you’ll save depends on your current interest rate and total debt amount,” Kumok says. “You can use the monthly difference to invest, pay down your other, higher-interest debt like credit cards faster, save for a down payment or more.”

Refinancing Federal Student Loans

The biggest question, though, is whether you should refinance your federal student loans. While you might get a better interest rate, Minsky warns, doing so might mean missing out on other benefits. Once your refinance federal student loans, you lose access to benefits like:

If you think you might need these programs in the future, Minsky explains, it’s a good idea to avoid refinancing your federal student loans. “Once you refinance, there’s no going back and you lose the federal loan benefits,” he says.

This was especially relevant during the COVID-19 pandemic, where the federal government suspended payments and interest on all federal student loans as part of its emergency relief measures, but private student loan borrowers got little to no relief

Should You Refinance Your Federal Student Loans Right Now?

Refinancing private student loans could potentially save you money on interest if you can get a low rate, but you shouldn’t refinance federal student loans right now — even if you think you won’t use the benefits. 

As part of the government’s response to the COVID-19 pandemic, certain federal student loan payments are in forbearance and not accruing interest. The current forbearance is set to expire on January 31, 2022. 

Best Student Loan Refinancing Lenders of July 2022

How We Chose These Lenders

To find the best student loan refinancing lenders, we looked at the most commonly reviewed and searched for lenders on the marketplace that offered student loan refinancing. Some are lenders that specialize in student loans, while others are larger banks that offer multiple financial products, including student loan refinancing. Then, we cut the list based on the following criteria:

  • The lender must offer refinancing for both federal and private student loans. We want our list to be accessible to all borrowers.
  • We eliminated any lenders that charged origination fees and prepayment penalties. Origination fees increase the cost of borrowing as a whole, while prepayment penalties make it harder for borrowers to make extra payments or pay their loans off early.
  • We eliminated any lenders that did not publicly display their rate ranges, or required any sort of sign-up to see general rate and fee information. We believe that transparency is important, and borrowers should be able to quickly see general rate information in order to easily compare lenders.
    • While we looked at whether lenders made their rate and fee information publicly and easily accessible — as doing so is a sign of transparency — we did not factor the rates themselves into our evaluation of each lender. This is because rates are highly dependent on individual factors such as credit score, income, and location. It’s difficult to make generalizations about a lender’s quality based on the rates they offer, as they might serve different groups of consumers with different financial profiles.
  • We eliminated any lender that did not have at least an A rating with the Better Business Bureau (BBB). According to the BBB, ratings are determined based on factors such as a business’s complaint history, time in business, transparency, and any licensing and government actions known to the BBB.

Laurel Road

Laurel Road was acquired by KeyBank in 2019 and offers access to a variety of banking products, including student loan refinancing. It’s possible to get a Laurel Road loan with a cosigner, with cosigner release available after 36 consecutive payments. Laurel Road also offers a checking account that can be connected to your refinancing application. If you open a checking account and set up monthly direct deposits, you may be eligible for a rate discount on your student loan. Another unique offering is a credit card that offers up to 2% back — and lets you apply those rewards toward your student loan debt. 

Laurel Road offers multiple refinancing options, including on private parent loans, parent PLUS loans, federal loans, and graduate school loans. For those who are still in school, Laurel Road allows you to refinance while you’re in your final semester. One of the main drawbacks is that refinancing for associate degrees is limited to certain healthcare-related programs.

Laurel Road Details
Current ratesSee lender website for the most up-to-date rate information
Types of loans available for refinancingFederal and private undergraduate and graduate student loans, parent loans and parent PLUS loans
Minimum and Maximum loan amount$5,000 up to 100% of outstanding loan amounts
Origination fees? (Yes/No)No
Prepayment penalties? (Yes/No)No
Offers co-signer release? (Yes/No)Yes
Offers pre-qualification without a hard credit check? (Yes/No)Yes
Degree required? (Yes/No)Yes, you must have a bachelor’s or graduate degree, or an associate’s degree in specific professions, although you can apply in the last semester of your program
Eligibility criteria• Minimum credit score: Not specified
• Minimum income: Not specified
U.S. citizen or permanent resident with a valid I-551 form

Earnest

Earnest offers a variety of lending products, including private student loans and personal loans, in addition to student loan refinancing. Earnest is also launching a credit card designed to give up to 3% cash back toward paying down student debt. 

Earnest has a list of additional eligibility requirements beyond the typical credit score and income criteria, including having enough in savings to cover at least two months’ worth of expenses. While the required credit score minimum is relatively low, at 650, Earnest is looking for information on how you manage your money. One of the main drawbacks is that, while you can improve your rate by adding a cosigner, there is no cosigner release. You’ll have to refinance into your own name if you want a cosigner off the loan later.

Earnest Details
Current ratesSee lender website for the most up-to-date rate information
Types of loans available for refinancingFederal and private undergraduate and graduate student loans, parent loans and parent PLUS loans
Minimum and Maximum loan amount$5,000 ($10,000 in California) up to $500,000
Origination fees?No
Prepayment penalties?No
Offers co-signer release?No
Offers pre-qualification without a hard credit check? (Yes/No)Yes
Degree required?Yes, you must have a bachelor’s or graduate degree, except in certain circumstances, although you can apply in the last semester of your program
Eligibility criteria• Minimum credit score: 650
• Minimum income: Not specified, but you must have consistent income
U.S. citizen or permanent resident with a 10-year card
Enough savings to cover two months’ of expenses
Can’t live in Kentucky or Nevada
Current on rent or mortgage payments
No bankruptcy on your credit report

SoFi

SoFi first made a name for itself in the student loan space, but the company has since branched out and offers an entire range of banking and investment products in addition to student loan refinancing. SoFi is known for its additional member perks, including a rate match offer, periodic sign-up bonuses for opening new accounts, as well as access to free financial planning and career coaching services.

SoFi requires that you refinance at least $5,000. The lender offers a rate match — and will give you $100 if you get a lower rate offer elsewhere. One drawback with SoFi is that it only offers a cosigner release on new private student loans, not on refinancing. If you apply with a cosigner, you won’t be able to release them without refinancing again. 

SoFi Details
Current ratesSee lender website for the most up-to-date rate information
Types of loans available for refinancingFederal and private undergraduate and graduate student loans, and parent PLUS loans
Minimum and Maximum loan amountAt least $5,000
Origination fees?No
Prepayment penalties?No
Offers co-signer release?No
Offers pre-qualification without a hard credit check? (Yes/No)Yes
Degree required?Yes, you must have a bachelor’s or graduate degree, or an associate’s degree
Eligibility criteria• Minimum credit score: 650
• Minimum income: No minimum, but you must be employed or have an offer of employment and have cash flow
• U.S. citizen or permanent resident with a valid green card of more than two years
• Age of majority in your state

PenFed

Pentagon Federal Credit Union, or PenFed, offers a variety of banking products in addition to student loan refinancing, which is handled through Purefy. However, because PenFed is a credit union, you do have to meet certain requirements to join. Unlike some other credit unions, membership is easy to get and open to everyone — you just need to open a Share account (a regular savings account) or a Premium Online Savings Account and deposit at least $5.

If you’re interested in establishing a membership, a PenFed student loan refinance can make sense if you have a higher amount of student loan debt. The minimum required loan amount is higher than many other refinancing lenders, at $7,500, but you can borrow up to $500,000 to refinance all of your loans. While this high minimum can be a drawback if you don’t have a lot of loans, PenFed does offer a cosigner release after 12 months, which is a shorter time period than some other lenders. However, you must have a degree in order to qualify and the credit qualifications are stricter. 

PenFed Details
Current ratesSee lender website for the most up-to-date rate information
Types of loans available for refinancingFederal and private undergraduate and graduate student loans, and parent PLUS loans
Minimum and Maximum loan amount$7,500 up to $500,000
Origination fees?No
Prepayment penalties?No
Offers co-signer release?Yes
Offers pre-qualification without a hard credit check? (Yes/No)Yes
Degree required?Yes, you must have a bachelor’s or graduate degree, or an associate’s degree
Eligibility criteria• Minimum credit score: 670 – but you need to have a cosigner
• Minimum income: $25,000 – but you need to have a cosigner
U.S. citizen

Education Loan Finance

Education Loan Finance (ELFI) is a division of SouthEast Bank, which is based in Tennessee. In addition to offering student loan products and refinancing, ELFI also manages student loan benefits for employers. ELFI offers personalized service on loans, and is transparent about its process. 

While ELFI can be a good choice for those who have high credit scores and high student loan balances, it can be difficult to qualify. You need to have a credit score of at least 680 or get a cosigner — and there’s no option for cosigner release. Additionally, the minimum loan amount for refinancing is $15,000. You must also have at least a bachelor’s degree to qualify. If you can meet those requirements, though, you’re likely to have a good experience.

Education Loan Finance Details
Current ratesSee lender website for most up-to-date rate information
Types of loans available for refinancingFederal and private undergraduate and graduate student loans, parent loans and parent PLUS loans
Minimum and Maximum loan amount$15,000 up to an amount based on eligibility
Origination fees?No
Prepayment penalties?No
Offers co-signer release?No
Offers pre-qualification without a hard credit check? (Yes/No)Yes
Degree required?Yes, you must have a bachelor’s degree or higher
Eligibility criteria• Minimum credit score: 680
• Minimum income: $35,000
U.S. citizen or permanent resident

How to Find the Best Student Loan Refinancing Rates

Just like with personal loans, every private student loan refinance lender will set its own rates. The exact rate you’ll get depends on your creditworthiness — meaning whether or not the lender thinks you’re likely to repay the loan on time and in full. To determine this, the lender will look at factors like your credit history, credit score, current income, employment status, debt-to-income ratio, and other factors. 

In some cases, the low rates advertised on lenders’ websites may only be available to the most creditworthy borrowers, and the rate you get may be higher. Some lenders may also advertise two types of rates: fixed and variable. With a fixed-rate loan, the interest rate you get when you apply for the loan will be the interest rate you have for the entire duration. With a variable-rate loan, your rate is based on the market rate plus a margin, and may change if the market rate changes. Variable-rate loans tend to offer lower initial rates than a fixed-rate loan of the same amount and term, but they’re riskier because your rate — and thus your monthly payment — could increase in the future if the market rate increases. 

The best thing you can do to make sure you get the lowest rate possible is to compare rates from multiple lenders. Many lenders will let you check your rate or pre-qualify for a refinance with a soft credit inquiry, meaning you can shop around easily without your credit score being affected. And even if a lender does require a hard credit inquiry to view your rate, certain credit scoring models will count multiple hard credit inquiries within a short period of time as one inquiry, according to the credit bureau Experian

In addition to rates, make sure you also compare fees — some lenders may charge origination fees, application fees, or other fees that can drive up the cost of the loan.
If you’re having trouble qualifying for low rates — or a refinance at all — due to your credit history, it might be worth holding off on a refinance until your credit score improves. After all, the whole point of a refinance is to get a lower rate. Adding a co-signer with better credit than you may also help you qualify for lower rates, although that comes with its own pros, cons, and risks that you should be aware of.

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