How to refinance your student loans in 4 steps

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Refinancing student loans is the process of taking out a new loan to pay off your existing educational debt. For some people, it’s a smart move that can save money and improve their financial lives. For others, student loan refinancing may not be the right step. If you’re wondering how to refinance student loans and whether doing so makes sense for you, this guide is a good place to start.

Should I refinance my student loan?

Refinancing student loans has the potential to help you get out of debt sooner and possibly reduce your monthly payment obligations if you qualify for a good deal. It’s a good move for some people, but not for everyone. Even if you can qualify for a new loan, you should take some time to consider if refinancing your student debt is right for your situation.

Before you decide to refinance your student loan, there are a few factors to consider.

  • Type of loan: The type of loan you have may impact your options for refinancing. Refinancing can only be done through private lenders, so refinancing your federal loans means that you’ll lose federal protections — like federal forbearance, income-driven repayment plans and more.
  • Remaining time left: Refinancing into a longer repayment period could increase the overall amount of interest you’ll pay on your loan, so if your loan is almost paid off, it could be cheaper to stick with the loan you already have. If you’re just at the start of your repayment period, on the other hand, refinancing may not impact you as much.
  • Current interest rate: Most people choose to refinance in order to get a lower interest rate. Getting a lower rate means that you’ll pay less in interest over the loan term.
  • Monthly payment: Refinancing is a good idea if you have an unmanageable monthly payment. Extending your repayment term may ultimately increase the amount of interest you pay, but it will also lower your monthly bill.

When in doubt, use a student loan calculator to compare your current loan with any new loans you’re considering.

How to refinance your student loan in 4 steps

There are four simple steps to take if you’re ready to refinance your student loan:

  1. Check your credit.
  2. Shop for the best rate.
  3. Choose a loan offer.
  4. Fill out an official loan application.

1. Check your credit

Before you apply for any type of financing, review your credit reports from Equifax, TransUnion and Experian before you apply for any type of financing. When you apply to refinance your student loans, one of the first steps a lender will take will be to check at least one of your credit reports and credit scores.

You should go over your reports regularly to check for any mistakes or errors. If you discover inaccurate information on a credit report, the Fair Credit Reporting Act (FCRA) gives you the right to dispute those items with the appropriate credit-reporting agency.

It’s also wise to get an understanding of where your credit currently stands prior to filling out loan applications. If you find that your credit isn’t in the best shape, you can work to improve your credit before you try to refinance.

The FCRA lets you claim free reports from all three credit bureaus once every 12 months at In response to COVID-19, you can access free weekly reports at the same website until April 2021. There are a number of other websites where you can access free credit scores as well.

Takeaway: It’s best to review your three credit reports and scores before you attempt to refinance your student loans to make sure that you understand where your credit stands and to confirm that there are no errors.

2. Shop for the best rate

Researching student loan refinancing rates and checking with multiple lenders to find the best rate is a key element in successfully refinancing your student loans. In fact, rate shopping should be something you do anytime you’re looking for a new loan or credit card.

Search online to compare lenders’ rates and fees. If a lender offers a prequalification feature, all the better. With a prequalification process, you can generally get an estimated rate with only a soft credit inquiry, which does not affect your credit score.

Keep the condition of your credit in mind while you’re looking at potential loan offers. For example, if you check your credit and find that you have excellent credit scores, you may be able to qualify for the best deals available. If your credit is damaged, however, compare deals from lenders that are willing to work with people with fair or bad credit ratings or lenders that advertise low rate caps.

Takeaway: Take the time to check rates and fees with at least three separate lenders before you commit to a new loan.

3. Choose a loan offer

Once you’ve reviewed (and hopefully prequalified for) several loan offers, you’ll be better equipped to choose the option that suits you best. The lender you choose to work with may let you select your preferred repayment terms as well.

A shorter loan term (e.g., five years) might help you secure a lower interest rate and pay off your debt faster. However, your monthly payment would likely be higher. If you extend the loan term, on the other hand, you could reduce the size of your monthly payments and make managing your budget easier. The trade-off would be more interest paid over the life of the loan and more time passing before you eliminate the debt.

Takeaway: Look at your budget and overall financial picture to decide which loan terms make the most sense.

4. Fill out an official loan application

You’ll need to fill out an official loan application once you’ve narrowed down your preferred lender and loan offer. Even if you went through a lender’s prequalification process, you will need to complete this step before your loan can be approved.

At this point, the lender will likely request a hard credit inquiry to access your full credit report.

The lender will want additional information that you didn’t include on your prequalification form. If you’re applying with a co-signer, you’ll need to provide their information as well.

You may need to provide the lender with copies of documents such as:

  • Social Security card.
  • Driver’s license or government ID.
  • Loan payoff statements from existing student loan lenders or servicers.
  • Proof of graduation.
  • Proof of employment (paystubs, W-2, etc.).

If you’re approved to refinance your student loans, remember that your new lender may not pay off your former loans right away. Sometimes the process can take a few weeks. Continue making any student loan payments that come due in the meantime so you don’t face late fees or potential negative credit reporting.

Takeaway: Having your loan documents ready before you fill out your application to refinance might help the process go smoother and faster. Don’t stop paying your original student loans until you confirm that they are officially refinanced.

How to find out if you’re eligible for student loan refinancing

Before you can refinance your student loans, you first need to discover if you’re eligible for a new loan. Unfortunately, not everyone can satisfy a lender’s eligibility criteria.

Every lender’s criteria for refinancing student loans is a little different. But in general, you will need be able to satisfy the following:

  • Your credit score meets or exceeds the lender’s minimum score requirement (often in the mid- to high 600s).
  • Your debt-to-income ratio isn’t too high (typically less than 43 percent).
  • The loans you wish to consolidate meet the lender’s definition of eligible student loans.

Some lenders will let you refinance student loans with a co-signer. Including a loved one who has good credit on your new loan application might help you qualify if you have difficulty meeting some of the lender’s requirements on your own.

Just keep in mind that co-signing is a big and risky favor to ask of someone. Your co-signer would be equally liable for the debt, just as much as if they were the primary borrower. The loan would appear on both of your credit reports as well. If you miss payments, you and your co-signer could both see drops in your credit scores.

Next steps

Do your homework, compare multiple offers and consider both the risks and benefits of refinancing before you fill out any official loan applications. Refinancing student loans is wise for many people, but not for everyone. Of course, if your current student loans are private and aren’t backed by the federal government, there’s little downside to refinancing if you can score a better rate — just make sure to factor in any application or origination fees before doing so.

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Written by
Michelle Black
Contributing writer
Michelle Lambright Black is a credit expert with over 19 years of experience, a freelance writer and a certified credit expert witness. In addition to writing for Bankrate, Michelle's work is featured with numerous publications including FICO, Experian, Forbes, U.S. News & World Report and Reader’s Digest, among others.
Edited by
Student loans editor