4 Best Student Loan Refinance Companies Of 2023
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Trapped in student loan debt with seemingly no light at the end of the tunnel? By refinancing your student loans — replacing your current loan(s) with one that has a lower interest rate — you could potentially save thousands in interest.
There are a handful of companies that will help you make this move. Here are four of the best student loan refinance companies to consider.
As a marketplace for all sorts of loans, Credible lets you compare prequalified rates in one place. All you have to do is fill out one simple form and Credible will find you up to 10 lenders in just 2 minutes. The company’s Client Success Team is available around the clock to help you with any questions you might have!
Type of loan: Variable and fixed rate.
Minimum credit score: 670-700 recommended.
Why we like it: No prepayment penalties, loan application fees, or origination fees. The service is free to use and rate checks won’t even impact your credit score.
Additional features: Get multiple rates with a single form, final offers in as little as one business day, and a $300 welcome bonus when you complete your refinancing.
2. Splash Financial
Splash Financial is a marketplace specifically designed for student loan refinancing. The company uses its network of lending partners to help you lock in low rates for the lifetime of your loan.
Type of loan: Variable and fixed rate.
Minimum credit score: 640 recommended.
Why we like it: There are no application fees, origination fees, or prepayment penalties, and rate checks don’t impact your credit score.
LendKey is a platform that partners with credit unions and banks to offer low-interest loans — primarily in the student loans and home improvement spaces. The company allows users to check their student loan refinance rates without any impact to their credit score.
Type of loan: Variable and fixed rates.
Minimum credit score: 660 recommended.
Why we like it: LendKey’s student loan refinancing calculator helps you understand what you could potentially save on your monthly payment and interest fees.
Additional features: No application fees, origination fees, or prepayment penalties. Loans range from 5 – 20 years.
Earnest is an online lender that specializes in student loan refinancing and private student loans. With Earnest, you get the flexibility to choose your payment amount based on your budget, adjust your payment date at any time, and pay off your loan early without prepayment penalties. You can find out if you’re eligible in just 2 minutes without impacting your credit score. To date, the company has helped more than 130,000 people refinance $11.6 billion in total student loans.
Type of loan: Variable and fixed rate.
Minimum credit score: 650 recommended.
Why we like it: No application fees, origination fees, or late fees. You can choose your monthly payment from monthly or bi-weekly options, and adjust your payment date with ease.
Additional features: The option to skip one payment every 12 months and make it up later. Assistance from the company’s Client Happiness team.
What Is Student Loan Refinancing?
Student loan refinancing is the process of paying off one or more existing federal or private student loans using a new private loan that has new terms, and ideally, a lower interest rate.
What Is the Difference Between Student Loan Consolidation and Refinancing?
People often conflate the terms consolidation and refinancing, but there are distinct differences between the two.
Consolidation takes multiple federal or private loans (or a combination of both) and replaces them with one new loan. This allows you to make payments to one account going forward.
If you get a new federal loan, you will continue to qualify for any government programs you may have had access to with your previous loans. When you consolidate federal loans only, your new interest rate will typically be the weighted average of your interest rates.
When consolidating to a new private loan, you may be able to get a lower interest than the average interest rate of your previous loans.
Refinancing, on the other hand, takes one or more student loans (whether federal, private, or both) and replaces them with a new private student loan that has a lower interest rate — typically, this is a move made to save money on interest.
6 Steps to Refinancing Your Student Loans
Fortunately, refinancing your student loans is a fairly straightforward process. Here are the six steps you’ll need to take:
1. Determine if refinancing is a good move for you.
2. Check out your refinancing rates.
3. Select a lender and loan terms.
4. Submit your refinancing application.
5. Complete and submit all loan documents.
6. Make payments to your new lender going forward.
The Requirements to Refinance Student Loans
When you were first approved for your federal or private student loans, it’s likely that you only needed to fill out the FAFSA. At most, you might have had your credit checked.
But when looking to refinance your student loans, you may need to meet a larger set of requirements. As is the case with a mortgage, auto loan, or personal loan, your lender might consider the following factors before approving you for a new loan:
- Credit score
- Loan repayment history
- Annual income
- Assets and savings
- Degree type and college
Factors to Consider When Refinancing
Not all loans are created equal. Particularly if you have received multiple offers, you’ll want to carefully weigh the advantages of each offer before choosing a loan to apply for. Some of the most important factors you will want to consider include the following:
- Interest rate
- Variable rate or fixed rate
- Length of loan
- Minimum and maximum loan amounts
- Credit score requirements
- Income requirements
What Is the Best Student Loan Refinance Company?
There are so many different student loan refinance companies that may be willing to offer you a new loan. The four companies we’ve mentioned in this article are great options.
However, the best student loan refinance company for you will depend on your existing loans, your refinancing needs, and the offer you receive. Typically, the lender that offers you the lowest interest rate and the best terms is the best option for you.
When Is the Best Time to Refinance Student Loans?
Any time you can get a new loan with a lower interest rate to replace your existing loans, you should consider refinancing.
Take a moment to check out your interest rates today. If they are lower than the interest rate of your current loan, now might be the right time to get your student loans refinanced.
What Are the Risks of Student Loan Refinancing?
As long as you choose the right loan for you — one that saves you money in interest and helps you get out of debt faster — there aren’t many few risks that come with refinancing.
One risk is that you may lose access to programs that your original loans made you eligible for — including student loan forgiveness, deferment, and hardship options. Particularly if you have federal student loans, consider the different programs you’ll be giving up if you choose to refinance.
What Credit Score Do I Need to Refinance Student Loans?
Minimum credit score requirements vary from lender to lender. Generally speaking, most lenders prefer credit scores that are at least 600 or above.
Keep in mind, the higher your credit score, the more options, better terms, and lower interest rates you’re likely to come across.
Does Refinancing Student Loans Hurt Your Credit?
As you’re checking your refinancing rates with lenders, you’re probably wondering, are these checks hurting my credit?
The answer here is almost always no. Banks, credit unions, and other lenders typically only require a soft credit pull when performing a rate check — an action that rarely impacts your credit at all.
However, when you proceed with an offer and apply for the loan, the lender will likely need to perform a hard credit pull. This will affect your credit, but the impact should be minimal.
Is It Worth Refinancing Student Loans?
In theory, replacing an existing loan with one that has a lower interest rate should save you money. Even shaving 1% – 2% off your old interest rate has the potential to save you thousands of dollars.
However, refinancing federal student loans isn’t always a good idea. The government often extends relief to borrowers during hard times. Think twice before refinancing your federal student loans if you’re going to lose access to important programs.
How Can I Lower My Student Loan Interest Rate?
Refinancing will allow you to pay off your current student loans and begin making payments on your new loan with a lower interest rate going forward.
Can You Refinance Private Loans?
Yes, private student loans are among the easiest and most common loans to refinance. Getting a new loan with a lower interest rate could potentially save you thousands of dollars.
Can You Refinance Federal Loans?
Yes, federal student loans can be refinanced. However, federal loans typically come with lower interest rates than many private loans, so you may not always find a new private loan with a lower interest rate than that of your federal loan(s).
You may also lose access to certain government programs and benefits when you refinance your federal student loans. It’s recommended that weighing the pros and cons of refinancing federal loans is done on a case-by-case basis.
Can You Refinance Parent PLUS Loans?
Yes, parent PLUS loans can be refinanced, and it’s often advantageous to do so. If a new private loan has a lower interest rate than your parent PLUS loan, consider refinancing.
Can You Refinance Spousal Consolidation Loans?
Yes, you can refinance spousal consolidation loans; but you may struggle to find a lender that will allow you to do so, as they are few and far between.
Can You Refinance Multiple Loans Together?
Yes, you can refinance multiple student loans together, and this is actually one of the benefits of refinancing — making payments on a single account going forward.
You will, however, need to make sure that the total amount of your new loan exceeds the combined balance of your existing student loans.
Can You Refinance More Than Once?
There is no limit to how many times you can refinance your student loans. If you refinance today and find an even lower interest rate tomorrow, you can still replace your latest loan with an even newer one.
However, every time you refinance a loan, you’ll need to make sure there are no prepayment penalties for paying off your loan early.
Also, keep in mind that, although your monthly payment may be lower after refinancing, your loan terms tend to extend out whenever you refinance. Refinancing repeatedly might result in you hanging on to your student loans for longer than you might like.
Is Refinancing Your Student Loans the Right Move for You?
While refinancing is generally considered to be a smart move whenever a loan with a lower interest rate is on the table, it should be reviewed on a case-by-case basis.
Check out your rates with some of the best student loan refinance companies mentioned above, and find out if you could potentially save thousands on your student loans!