Save by refinancing student loans.

When you refinance your student loans, you have the opportunity to reduce your monthly payments, cut down on interest costs throughout the loan's duration, and simplify your repayment process. However, it's crucial to carefully compare various private student loan refinance options, as there are significant variations to take into account.

While numerous private student loan refinance companies provide loans that can assist you in accomplishing these objectives, it's crucial to take note of the significant distinctions. Eligibility criteria, loan terms, and fees can differ among different lenders, and the interest rate you secure may be influenced by the specific lender you select. Additionally, the choice you make may offer additional advantages and features, such as discounts or complimentary services, which can vary.

Considering the array of features, both enjoyable and crucial contractual details, it is vital to thoroughly evaluate your options when selecting a lender.

Learn more about refinancing student loans:

Is student loan refinancing right for me?

Before applying and accepting a loan offer, there are important factors to consider, even if you meet the eligibility requirements.

Student loan refinancing can provide up to six key advantages:

• Decreasing your interest rate. If you possess good to excellent credit, minimal monthly debt compared to your income (or a co-signer meeting these criteria), your new loan might have a lower interest rate than the weighted average of your current loans. This reduction can lead to lower overall loan repayment costs.
• Transitioning interest-rate types. If you presently hold a variable-rate loan and desire a secured rate and corresponding monthly payment, refinancing to a fixed-rate loan might be a prudent choice. Similarly, if you possess a fixed-rate loan and believe a variable-rate loan would be more advantageous, refinancing may be necessary to facilitate the switch.
• Reducing monthly payments. Opting for a longer loan term or qualifying for a lower interest rate can potentially lower your monthly payment. This allows you to allocate funds towards other essential expenses, or you can choose to make additional payments to expedite the loan payoff.
• Streamlining with loan consolidation. Consolidating multiple loans into a single loan can simplify expense tracking and management, particularly if you are currently dealing with multiple loan servicers.
• Removing a co-signer. If your lender doesn't offer the option to release a co-signer from your private student loans, your sole recourse to assume full responsibility for the loan is to refinance it in your name. Alternatively, you can consider refinancing with a co-signer through a lender that allows for potential co-signer release in the future.
• Shifting parent loans. When parents obtain student loans to assist in funding their child's education, they often anticipate the child assuming the debt after graduation and securing employment. By having the child refinance their student loans, which can include the parent's loans, the legal responsibility for the debt can be transferred to the child.

Weighing the risks of refinancing: Refinancing, particularly federal student loans, entails substantial risk.

Potential drawbacks exist regardless of whether you're refinancing private or federal loans. These disadvantages comprise...

• Elimination of Interest Rate Reduction. One common variation of losing discounts when refinancing loans is the elimination of an interest rate reduction. Some lenders provide borrowers with the opportunity to lower their interest rate by a certain percentage if they meet specific criteria or conditions. However, if you choose to refinance your loan with a different lender, you may lose this interest rate reduction, resulting in a higher interest rate and potentially increased monthly payments.
• Shortened Loan Term. One variation that can increase your monthly payments when refinancing is opting for a shorter loan term. While a shorter term allows you to become debt-free quicker, it often leads to higher monthly payments. Even if you lower your interest rate through refinancing, the shorter repayment period can result in increased monthly obligations, potentially straining your budget.

Moreover, there are certain disadvantages that are particular to refinancing federal student loans with a private student loan.

• Loss of Flexible Payment Adjustments. Refinancing federal student loans with a private loan means giving up access to income-driven repayment plans, resulting in the inability to adjust monthly payments based on income fluctuations. This can make it challenging to manage loan payments during periods of financial instability or low income.

• Loss of Loan Forgiveness Opportunities: Refinancing federal student loans with a private loan means forfeiting eligibility for federal loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF). This can result in missing out on the potential for loan forgiveness after meeting specific criteria, such as working for a government or nonprofit organization for a designated period.

• Limited Deferment and Forbearance Eligibility: Refinancing federal student loans with a private loan can result in less forgiving deferment and forbearance options. While private lenders may offer similar options, they might have stricter qualification criteria, shorter timeframes, and borrowers will generally be responsible for accruing interest during these periods.
• Expedited Loan Defaults and Harsher Repercussions: Refinancing federal student loans with a private loan can lead to quicker defaults and more severe consequences. While federal loans allow for a grace period of 270 days before entering default, private student loans may default much sooner, placing borrowers at a higher risk of immediate collection actions and demanding the entire remaining balance, potentially with additional late payment fees. Restoring the loan or repairing credit may be more challenging or unavailable with private loan defaults.

Weighing the advantages and disadvantages, evaluating their relevance to your unique circumstances, and considering future possibilities are essential steps in making an informed and beneficial decision when contemplating student loan refinancing.

Ranking private student loan refinance companies: Our assessment.

SimpleTuition began by identifying the 14 largest national lenders offering private student loan refinancing to pinpoint the best companies. Each lender was assessed based on specific criteria, and the seven lenders with the highest average scores were designated as the "top lenders."

Analyzing interest rates: We evaluated the highest and lowest possible annual percentage rates (APRs) for both fixed- and variable-rate loans, comparing them to the average lowest and highest APRs. Lenders with below-average APRs received top ratings in our assessment.

Application and origination fees assessment: We evaluated whether lenders imposed fees for student loan refinancing applications or charged origination fees upon loan agreement. Among the 16 largest student loan refinancing companies, none imposed such fees, resulting in top ratings across the board.

Evaluation of Parent PLUS loan refinancing: We assessed whether lenders provided the option to refinance a Parent PLUS loan with your own loan or offered dedicated Parent PLUS loan refinancing for parents. Points were deducted if the lender did not offer either of these options.

Exploring repayment term options: Opting for the longest loan term available can help decrease monthly payments. With no prepayment penalties, you retain the flexibility to make extra payments and potentially pay off the loans ahead of schedule. While all seven top lenders provided up to a 20-year term, certain other major lenders limited their terms to 15 years.

Assessment of repayment term options: Opting for a longer repayment term can result in lower monthly payments, whereas a shorter term might yield a lower interest rate. The ideal choice depends on individual circumstances, and lenders received more points based on the variety of repayment term options they provided.

Prequalification with soft credit check: Certain lenders enable you to assess your loan eligibility and view estimated loan offers through a soft credit check, which does not impact your credit score. This convenient approach allows for easy comparison of offers without making a full commitment, and all seven lenders included this feature.

Co-signer release option: While you may require a co-signer for refinancing or to secure a lower interest rate, certain lenders allow you to release the co-signer and assume full responsibility for the loan after meeting consecutive on-time payment criteria and passing a credit check. Four out of the seven lenders received top ratings for providing this co-signer release option.

Benefit of autopay discount: Numerous lenders provide a 0.25 percent interest rate discount when you enroll in autopay. During our evaluation, lenders without any discount were deducted a point, while those offering a larger autopay discount received additional points.

Unemployment protection and forbearance options: In case of financial hardship, certain lenders provide the option to temporarily pause monthly payments without incurring late fees or risking loan default. The majority of top lenders offer up to 12 months of relief throughout the loan's lifespan, while one lender received a higher score for extending the forbearance period to 18 months.

Bonus features: Lenders that offer additional appealing benefits, such as SoFi's complimentary career coaching or CommonBond's commitment to funding the education of underprivileged children, received extra credit during our evaluation.

In descending order, the following private student loan refinancing companies got the best average score:

1. CommonBond
2. Laurel Road
3. SoFi
4. Earnest
5. LendKey
6. Citizens Bank
7. Education Loan Finance

In-depth insights into our leading student loan refinance lenders