Student loan refinancing can help you trade in the student loans you have for a new loan with better rates and terms. Borrowers who refinance their student loans can often secure a considerably lower interest rate, but can also change their monthly payment to a more affordable amount. Many times, borrowers can qualify for a new loan offer that helps them save money every month and over the long-term, too.
Not all student loan companies are created equal, which is why it’s important to shop around and compare loan rates and terms before you apply. We compared all of the best student loan refinance companies of 2020 to find the best options for the broadest range of applicants. If you’re gearing up to refinance your student loans, consider these providers first.
OUR SUMMARY OF THE TOP PROVIDERS
Student Loan Refinance COMPANY REVIEWS
FAQs About Student Loan Refinancing
Trading in your student loans for a new one is a big deal, so make sure you understand the process inside and out. Here are some of the most commonly asked questions about student loan refinancing so you can make an informed decision.
What are the benefits of student loan refinancing?
Refinancing your student loans can help you secure a lower interest rate than you’re paying now. By reducing the interest charges on your loan, you’ll save money in the short-term and in the long-term. Refinancing can also help you adjust your monthly payment so you pay less each month, or so your loan repayment is completed over a faster timeline.
Refinancing also helps you simplify your student debt repayment by consolidating multiple payments and due dates into one loan and one payment each month.
What are the disadvantages of student loan refinancing?
Refinancing federal student loans means giving up federal protections, like deferment and forbearance. Switching from federal loans to private student loans also means you give up access to income-driven repayment programs such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR).
Why would I want a cosigner for my student loan refinancing application?
Having a cosigner with strong credit on your loan application helps you qualify for a lower interest rate or a loan with better terms. This is especially true if you haven’t established your own credit history, or you have bad credit. Your lender will consider your cosigner’s good credit as part of your loan application, which makes more competitive offers available to you.
Can I pay my new refinance student loan early?
Most student loans let you prepay your loan amount any time without a penalty. As you compare student loan refinancing companies, make sure you go with a lender that doesn’t charge prepayment penalties or fees.
What happens to my old student loans when I refinance them?
When you refinance your old student loans, your new loan proceeds are used to pay them off. This means that, ultimately, you’ll replace all of your old student loans with a brand new loan when refinancing. Your old loans are paid off and your old accounts are closed.
Will refinancing my student loans hurt my credit score?
Applying to refinance your student loans will result in a hard inquiry on your credit report, which can temporarily ding your credit score. However, any change to your credit score will only last for a short amount of time. If you make on-time payments on your new student loan for the long haul, you’ll boost your credit score over time.
Does the government offer student loan refinancing?
The federal government doesn’t let you refinance the federal loans you already have. It’s only loan product that comes close is a Direct Consolidation Loan. A Direct Consolidation Loan lets you consolidate your federal loans with a new fixed interest rate. Your new rate is based on the average of the interest rates on your existing loans.
Because Direct Consolidation Loans use the average of your current interest rates, this type of loan might not save you as much money on interest. However, a Direct Consolidation Loan from the federal government can help you consolidate your current federal loans and go from multiple payments each month to just one simple payment.