Best Student Loan Refinancing Options – There are many scenarios when student loan refinancing is a good idea, such as if you want to save money for the long term or if you don’t qualify for loan forgiveness.
Our goal is to give you the tools and confidence to improve your finances. Although we always receive compensation from our partner lenders that we acknowledge, all opinions are our own. Refinancing your mortgage can result in a higher total financing payment over the life of the loan.
Best Student Loan Refinancing Options
Student loan refinancing can have several goals. For example, you may want to get a lower interest rate, lower monthly payments, or pay off the loan faster.
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If your monthly student loan payments are too high for you to comfortably pay, you may want to consider refinancing your student loans to extend your repayment period. This can reduce the bill and reduce the strain on the budget.
Plus, when you consolidate your student loans by refinancing, you’re left with a single loan and payment, making payments easier to manage.
But keep in mind that choosing a longer repayment term means you’ll pay more interest over time.
Tip: It is generally recommended to choose the shortest repayment period in order to save as much interest as possible. If you choose a shorter term, you will get a better interest rate.
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If you’re wondering how competitive your credit is, the credit score tool below can help. Just enter your APR, credit score, monthly payment and remaining balance (calculations are good) to see how your credit grows.
Student loan interest rates are one of the most important factors in determining how much you pay on your loans. If your interest rate is high, you could be paying thousands of dollars in interest.
However, depending on your credit, you can lower your student loan interest by refinancing. This will save you a lot of money on interest costs and pay off your loan faster.
Example: If you have a $25,000 loan for 10 years at 7%, you would pay $9,833 in interest over the life of the loan.
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But by refinancing the 10-year 5% loan, you can save $3,013 on total interest costs.
Use our student loan refinancing calculator below and see how much you can save by refinancing your student loans.
By refinancing your student loan at 100% interest, you can save an additional $100 per month toward loan repayments. The total cost of the new loan will be in dollars.
The average student loan repayment period is 10 years, but this can vary depending on the loan balance and degree earned. If you want to pay off your student loans early, refinancing can be a good option.
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Depending on the size of the loan, you may be able to get a lower interest rate, which will reduce the amount of interest you pay and help you pay off the loan faster.
Or choose a shorter repayment period. This usually increases your monthly payment, but can also shorten your repayment period and get you a better interest rate.
Tip: Although it is possible to pay off the loan early without refinancing, it is often more cost-effective to refinance the loan for a shorter period or with a lower interest rate.
If you’re wondering how long it will take to pay off your student loans, enter your current credit information into the student loan repayment calculator below. Use the slider to see how a pay increase can change your pay date.
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If you increase the monthly payment on the $ loan by %, you will pay $ per month and pay off the loan by January 2021.
One of the main benefits of federal student loans is the ability to take advantage of student forgiveness programs, such as:
Unfortunately, while most federal student loans can be forgiven through the IDR program, private student loan forgiveness is not.
However, there are other options to help you manage and pay off your private student loan, such as refinancing.
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If you can secure a lower interest rate or better terms by refinancing your private student loan, it’s probably worth it.
While refinancing is a good idea in some cases, here are some scenarios where refinancing may not be worth it.
Tip: If you want to consolidate your federal student loans and are considering consolidating your federal and private student loans, remember that consolidating your loans with a direct federal consolidation loan allows you to keep federal benefits and protections.
You can extend the repayment period to up to 30 years to lower your monthly payments, but this means you’ll pay more interest over time.
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Due to the COVID-19 pandemic, federal student loan payments and the accrual of interest under the CARES Act have been suspended until May 1, 2022.
If you’re considering federal student loan refinancing, it’s probably best to wait until the administrative grace period ends so you don’t miss out on that grace period.
However, private student loans are not eligible for this federal student loan repayment option, which means refinancing is worth it if it saves you money or helps you pay off your loan faster.
Tip: While private loans are not eligible for CARES Act benefits, many private lenders are offering a variety of relief to borrowers affected by the pandemic, including payment deferrals and forbearance.
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If you’re having trouble making loan payments due to the coronavirus (COVID-19), be sure to contact your lender to learn about your private student loan repayment options.
If refinancing seems right for your situation, be sure to compare as many student loan refinancing companies as possible to find the loan that’s right for you. Consider the lender’s interest rates and repayment terms and fees.
Comparing lenders is easy – you can see the preset interest rates of our partner lenders in two minutes in the table below.
Lender ratings are evaluated by our editorial team with the help of our credit operations team. Lenders’ evaluation criteria includes 78 data points, including interest rates, loan terms, compliance transparency, repayment options, fees, discounts, customer service, co-op options and more. Read our full methodology.
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All APRs include automatic payments and loyalty discounts 1 Citizen Information 2College Ave Disclosure | 5 Publication of EDvestinU 3 Publication of ELFI 4 Publication of investments | 7ISL Educational Credit Disclosure
Dori Qin is a student loan authority and contributor. His work has appeared in the Huffington Post, Bankate, Inc., Quartz, and others. Not only is student loan debt currently at $1.6 trillion, but student loans are the second largest source of debt after mortgages.
The big difference between a mortgage and a student loan is that refinancing a mortgage is a (relatively) simple and well-known process, while refinancing a student loan is a new and confusing alternative.
Fortunately, many new banks and other types of lenders have emerged to meet the real need for student loan refinancing. However, not all Customer Centers are the same and it is important to understand the costs associated with recycling decisions.
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The first thing to consider on your way to student loan relief is the difference between federal loan consolidation and student loan refinancing. The two options are similar, and the terms refinancing and consolidation are sometimes used interchangeably, but every borrower should be aware of the difference between the two.
This option is exactly what it sounds like. A borrower can consolidate multiple federal student loans into a single loan with a single repayment schedule. This type of consolidation is only available for federal loans – personal loans cannot be consolidated.
In general, consolidating federal student loans doesn’t save you money because you calculate a weighted average interest rate on all of your loans. However, consolidation can switch from a variable-rate loan to a fixed-rate loan, which can lower your monthly payment (but usually means a longer payment term).
The main reason to consider federal student loan consolidation is to preserve benefits for federal borrowers, such as public service loan forgiveness, income-driven repayment plans, and deferment and forbearance options.
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Loan refinancing allows borrowers to apply for a new loan to be used to pay off one or more existing loans and is very similar to consolidation. The difference is that you can refinance federal or private loans, and by refinancing you can improve your interest rate and/or monthly payment.
Refinancing your federal student loans means you are no longer eligible for federal benefits. Refinancing can also increase the monthly installment depending on the repayment period.
The following tools provide a marketplace for student loan options. Advantages of using the marketplace: you can compare quickly