Bankrate’s guide to choosing the best student loan refinance company
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When comparing companies that offer student loan refinancing, look for a competitive interest rate, repayment terms that meet your needs and minimal fees. Loan details presented here are current as of the publish date, but you can check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as interest rate, loan amounts, fees, credit requirements and broad availability.
8 best student loan refinance companies in December 2020
Best student loan refinance rates in December 2020
| SoFi |
Overall refinancing
|
2.99% to 6.09%
|
2.25% to 6.09%
|
5 to 20 years
|
$5,000–full balance of education loans
|
| Earnest |
Flexible repayment options
|
Starting at 2.98%
|
Starting at 1.99%
|
5 to 20 years
|
$5,000–$500,000
|
| Laurel Road |
Students in health care
|
2.8% to 6%
|
1.89% to 5.9%
|
5 to 20 years
|
$5,000–full balance of education loans
|
| CommonBond |
Forbearance protection
|
2.78% to 5.59%
|
1.99% to 5.41% variable, 3.85% to 5.35% hybrid
|
5 to 20 years
|
Up to $500,000
|
| Citizens Bank |
Available discounts
|
2.99% to 8.49%
|
1.99% to 8.24%
|
5 to 20 years
|
$10,000–$500,000
|
| LendKey |
Long repayment terms
|
Starting at 2.99%
|
Starting at 2%
|
5 to 20 years
|
$5,000–$300,000
|
| College Ave |
No fees
|
3.74% to 8.99%
|
3.64% to 8.99%
|
5 to 20 years
|
$5,000–$300,000
|
| Splash Financial |
Low rates
|
2.8% to 6.72%
|
1.99% to 6.77%
|
5 to 25 years
|
$5,000–full balance of education loans
|
*Rates include autopay discount.
Summary: student loan refinance companies in 2020
What is student loan refinancing?
Student loan refinancing allows you to take out a new loan with one fixed, monthly payment to pay off your existing student loans. When you refinance your student loans, you may qualify for a lower interest rate and lower fees, which could help you save money on interest and pay off your loans faster.
While refinancing could be a great way to make your monthly student loan payments more achievable, it may not be the best option for everyone. You need to meet certain eligibility requirements, and you'll also lose out on benefits like income-based repayment and deferment options if you refinance your federal loans.
How does the coronavirus affect student loan refinancing?
With many Americans currently experiencing reduced income due to the coronavirus pandemic, student loan refinancing is an attractive option for those struggling to make student loan payments. Interest rates on student loans are at record lows, meaning now could be one of the best times to refinance your private student loans if you've been considering it.
However, think carefully before choosing to do this with your federal loans. Interest and payments are currently waived on federal student loans through Dec. 31, 2020; by refinancing your federal loans, you would be required to make payments with interest and lose the ability to take advantage of any future federal relief programs.
Learn more: Should you defer your federal student loans during coronavirus forbearance?
How to refinance student loans
Whether you're refinancing federal or private student loans, one of the most important steps you can take is to shop around. Check with multiple lenders and research student loan refinancing rates to ensure that you're borrowing from a trustworthy lender that's offering the best rates.
Once you find a lender that best suits your financial situation, check the specific refinancing requirements. These can vary from lender to lender, but here are a few general criteria to be aware of:
- Debt-to-income ratio: Your debt-to-income ratio is a measurement of how much debt you've accumulated in comparison to your monthly earnings. You may have a better chance of getting approved if your debt-to-income ratio is below 43 percent.
- Credit score: When you apply for any loan, your credit score has a large impact. Check your lender's credit score requirements before applying. If your credit score is in the mid-600s or lower, you may need to add a co-signer to your loan in order to qualify.
- Loan eligibility: Check to see if your student loans meet the lender eligibility requirements. Some lenders limit which type of loans you can refinance.
If the lender you're considering offers a prequalification tool, you can see your estimated rate based on your general financial history with a soft credit inquiry, which won't hurt your credit score.
After you've assessed multiple lenders and loan offers, you'll need to fill out the official application through your preferred lender. You'll also undergo a hard credit inquiry, so your credit score may drop a few points. If you're approved, your funds will go toward paying off your existing loans, and you'll enter the repayment period of your new loan.
Learn more: How to refinance student loans
Should I refinance my student loans?
Refinancing your student loans only makes financial sense if the loan you apply for has a lower interest rate than the current interest rate of your student loans. You can use Bankrate's loan calculator to determine your current monthly payment versus the loan you're considering.
You should also carefully consider the drawbacks if you're looking to refinance a federal student loan. You can only refinance a federal student loan with a private lender, and in doing so you will lose many of the benefits of the federal program. These include:
- Income-driven repayment plans.
- Loan forgiveness programs.
- Deferment and forbearance options.
- Waived interest and payments due to the coronavirus pandemic.
Learn more: Should you refinance your student loans now
What is the difference between student loan consolidation and student loan refinancing?
It's easy to conflate consolidation and refinancing when it comes to student loans. If you have private student loans, the two processes are functionally the same — you take out a new loan with a private lender in order to combine your loans or take advantage of a better interest rate.
However, if you want to consolidate a federal student loan, you'll have to apply for a federal Direct Consolidation Loan, which gives you a fixed interest rate based on the weighted average of your current loans' interest rates. Refinancing a student loan in order to score a better interest rate requires taking out a new loan with a private lender (and losing federal benefits in the process).
How does student loan consolidation work?
Student loan consolidation can work differently depending on whether you have federal or private student loans. If you have federal student loans and you want to consolidate into a new student loan product, you could do that with a Direct Consolidation Loan. This lets you combine all of your federal student loans into a single new loan product. This can be a good way to easily keep track of multiple loans and take advantage of a fixed interest rate, although you won’t get a lower interest rate, since Direct Consolidation Loans use a weighted average of the existing rates on your student loans.
With that in mind, you can also consolidate federal student loans or other private student loans with a private student lender. In this case, you would consolidate all your old loans into a new loan, hopefully to get a lower APR and better terms.
Just remember that if you consolidate federal student loans with a private lender, you’ll lose out on federal student loan benefits like forbearance, deferment and income-driven repayment plans.
Learn more: How to consolidate your student loans
Pros and cons of refinancing student loans
Pros:
- Consolidating several student loans into one, which means you can make just one payment each month.
- Simplifying your financial life.
- Securing a lower interest rate.
- Refinancing to a longer repayment period to get a lower monthly payment.
Cons:
- Private lenders usually require good or excellent credit (or a co-signer) to qualify for a new loan with their best rates and terms.
- You give up federal protections like deferment, forbearance and income-driven plans when you refinance federal loans with a private lender.
- You’re locking yourself into another repayment plan.
Should you refinance your student loans? That really depends on your financial situation and what your goals are. However, it can make sense to refinance if you have a good idea of what your income will be in the future and if you can qualify for a lower interest rate than you’re paying now.
If you want to know how much you could save by refinancing your student loans, try using a student loan calculator.
How to choose between a fixed-rate and a variable-rate loan
Most private lenders will let you refinance with either a fixed or a variable interest rate. With a fixed rate, your interest rate will never change, meaning your monthly payment will remain consistent. With a variable interest rate, your interest rate can fluctuate month-to-month based on market conditions.
The choice between a fixed or variable rate comes down mostly to your risk tolerance. If you value predictability in your finances, a fixed rate is a better choice — particularly if you can lock in a low rate. You do have the chance to save more money with a variable interest rate if interest rates dip below your starting rate, but the inverse is true as well; it's possible that interest rates could rise during your repayment term, costing you more money overall unless you can pay off your loan early.
Learn more: Fixed vs. variable rate student loans
Details: student loan refinance rates in 2020
The best student loan refinancing companies offer competitive interest rates and fees for qualified buyers. These companies also offer helpful resources on their websites, as well as the ability to apply for student loan refinancing online. Make sure to compare each of these lenders' loan terms and limitations before you apply.
- Best overall student loan refinance company: SoFi
- Best student loan refinance company for flexible repayment options: Earnest
- Best student loan refinance company for students in health care: Laurel Road
- Best student loan refinance company for forbearance protection: CommonBond
- Best student loan refinance company for available discounts: Citizens Bank
- Best student loan refinance company for long repayment terms: LendKey
- Best student loan refinance company for no fees: College Ave
- Best student loan refinance company for low rates: Splash Financial
Best overall student loan refinance company: SoFi
Overview: SoFi is one of the most popular lenders for student loan refinancing, and it’s easy to see why. This lender offers loans with competitive interest rates and no hidden fees, including no origination fees. You can even get prequalified for student loan refinancing online and without a hard inquiry on your credit report.
Perks: There are no fees with SoFi, and you can qualify for an autopay discount of 0.25 percent. SoFi's interest rates are exceptionally low, though the rate you're quoted depends on your credit score, your income and other factors.
What to watch out for: SoFi may not be a good option for people without stable income; it offers refinancing only to university graduates who have sufficient income, a responsible financial history and a strong monthly cash flow.
| SoFi |
| Variable: 2.25% to 6.09% (with autopay)
Fixed: 2.99% to 6.09% (with autopay) |
| $5,000 to full balance of qualified education loans |
| 5 to 20 years |
| None |
Best student loan refinance company for flexible repayment options: Earnest
Overview: Earnest lets you refinance your student loans with the potential for a low APR and flexible repayment options. In fact, Earnest even lets you pick a payment that fits with your budget, meaning it will tinker with the length of your loan until you land on a monthly payment you can afford. Variable interest rates start at 1.99 percent APR and fixed rates at 2.98 percent APR.
Perks: Earnest student loans don’t come with any origination fees. Earnest also offers customized rates based on a variety of factors outside of your credit score.
What to watch out for: You typically need a credit score of at least 650 to refinance your student loans with Earnest.
| Earnest |
| Variable: Starting at 1.99% (with autopay)
Fixed: Starting at 2.98% (with autopay) |
| $5,000 to $500,000 |
| 5 to 20 years |
| Returned payment fee: $8; Florida stamp tax: 0.35% |
Best student loan refinancing company for students in health care: Laurel Road
Overview: Laurel Road is a lender with low rates, a variety of repayment terms and a robust online experience. It's a particularly good choice for undergraduate and graduate students who are in the health care field; while most lenders require you to be out of school in order to refinance your student loans, Laurel Road allows students in health care to refinance as early as their final semester of school if they have found employment.
Perks: Among Laurel Road's perks is a quick application process — you should have a quote in as little as five minutes — and your choice of repayment term. The standard repayment terms are five, seven, 10, 15 and 20 years, but you can request any term length below 20 years.
What to watch out for: If you are not in a health care field, you must be employed for at least 12 months before becoming eligible for a Laurel Road student loan refinance.
| Laurel Road |
| Variable: 1.89% to 5.9% (with autopay)
Fixed: 2.8% to 6% (with autopay) |
| $5,000 to full amount of education loans |
| 5 to 20 years |
| None |
Best student loan refinancing company for forbearance protection: CommonBond
Overview: CommonBond lets you get prequalified for a new loan online and without a hard inquiry on your credit report. This lender offers fixed rates that start at just 2.78 percent APR and variable rates that start at 1.99 percent APR, and you can repay your loan in five to 20 years. This lender also offers loans with no prepayment fees or origination fees.
Perks: CommonBond offers up to 24 months of forbearance if you endure a hardship while paying down your student loans. It also offers a unique hybrid-rate loan, which gives you a fixed rate for the first five years of loan and a variable rate for the final five years. This allows you to pay down the majority of your interest while on a fixed rate and take advantage of a variable rate for the second half of your payments.
What to watch out for: The minimum credit score for student loan refinancing with CommonBond is 660, which may be out of reach for some borrowers.
| CommonBond |
| Variable: 1.99% to 5.41% (with autopay)
Fixed: 2.78% to 5.59% (with autopay)
Hybrid: 3.85% to 5.35% (with autopay) |
| Up to $500,000 |
| 5 to 20 years |
| Late payment fee: 5% or $10, whichever is less; Returned check fee: $5 |
Best student loan refinancing company for available discounts: Citizens Bank
Overview: Citizens Bank offers student loan refinancing for borrowers who need to refinance up to $500,000 in student loans. Variable interest rates as low as 1.99 percent APR are available, and you can choose a repayment option between five and 20 years.
Perks: You can qualify for several discounts that can reduce your interest rate, including a loyalty discount and an automatic payment discount. These loans can knock 0.5 percent off your APR, saving you even more money over the long term.
What to watch out for: You need to have at least $10,000 in loans to refinance with Citizens Bank.
| Citizens Bank |
| Variable: 1.99% to 8.24% (with autopay)
Fixed: 2.99% to 8.49% (with autopay) |
| $10,000 to $500,000 |
| 5 to 20 years |
| None |
Best student loan refinancing company for long repayment terms: LendKey
Overview: LendKey offers student loan refinancing with variable APRs starting at 2 percent and fixed APRs starting at 2.99 percent. There are no origination fees.
Perks: Like several other lenders, LendKey lets you refinance your student loans in terms of up to 20 years. This means you could significantly lower your monthly payment by taking on a longer loan.
What to watch out for: LendKey is a lending platform that connects you with multiple lenders in this space. In other words, it doesn't lend the money itself. It only matches you with eligible lenders that may be able to meet your student loan refinancing needs.
| LendKey |
| Variable: Starting at 2% (with autopay)
Fixed: Starting at 2.99% (with autopay) |
| $5,000 to $300,000 |
| 5 to 20 years |
| None |
Best student loan refinancing company for no fees: College Ave
Overview: If you want to refinance your student loans and you don’t want to pay any fees, College Ave is worth checking out. This lender offers variable rates as low as 3.64 percent APR and fixed rates as low as 3.74 percent APR, and you can refinance up to $300,000 in student debt if you have a medical, dental, pharmacy or veterinary doctorate degree.
Perks: This lender doesn’t charge any fees for its loans. You can also choose among 16 different loan terms and repayment plans.
What to watch out for: Student loan refinancing is not available to borrowers in Maine. The maximum loan amount for undergraduate borrowers is $150,000, which is less than that of many other lenders.
| College Ave |
| Variable: 3.64% to 8.99% (with autopay)
Fixed: 3.74% to 8.99% (with autopay) |
| $5,000 to $300,000 |
| 5 to 20 years |
| None |
Best student loan refinancing company for low rates: Splash Financial
Overview: Splash Financial advertises some of the lowest rates for student loan refinancing, and you can borrow from $5,000 to the full amount of your loans.
Perks: In addition to potentially low rates, you can also receive a $250 cash bonus when you refinance your loans and refer a friend who refinances their loans.
What to watch out for: Splash works with banks and credit unions, which are its lending partners. In other words, Splash doesn’t originate the loan itself — meaning you may have to become a member of a credit union in order to receive your loan. Because Splash doesn't originate its own loans, your potential fees and discounts will vary based on which lender you're matched with.
| Splash Financial |
| Variable: 1.99% to 6.77% (with autopay)
Fixed: 2.8% to 6.72% (with autopay) |
| $5,000 up to the full amount of your loans |
| 5 to 25 years |
| None |
Frequently asked questions about student loan refinancing
Am I eligible for student loan consolidation?
Student loan refinancing companies all have their own eligibility requirements that you’ll have to meet to get approved, including a minimum credit score. We suggest checking eligibility requirements for any company you’re considering.
You can also use a student loan refinancing platform like LendKey to compare rates among multiple banks and credit unions. This way, you can enter your information once and compare loan offers from companies whose eligibility requirements you meet.
How can I choose the best refinancing company?
Make sure to compare student loan refinancing companies in terms of their interest rates and repayment terms. Also check for hidden fees, including application fees and late fees. If your goal is finding the best student loan refinance rates, we recommend shopping around with at least three to four lenders and taking advantage of any prequalification offers if they're available — prequalification allows you to check your eligibility and rates without impacting your credit score.
What credit score do I need to refinance my student loans?
Credit score requirements can vary from lender to lender, but you'll likely need a credit score within the mid- to high 600s. However, if you have less-than-stellar credit, you still may be eligible to refinance your loans with the help of a co-signer.
Many lenders offer the option to add a co-signer with a higher credit score to increase your chances of approval. Any payments you miss will be charged to your co-signer, so it's important to be diligent about making the monthly payments in full and on time.
