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March 26, 2020
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If you’ve taken out a student loan that doesn’t fit your needs, you may be able to refinance to get a better deal. It’s possible to score a lower interest rate with a private lender if your credit score has improved and you have a continuous employment history. Refinancing could also help you spread out your loan over a longer period if you’re finding it hard to keep up with monthly payments. Keep in mind, however, that if you refinance to a longer term, you’d pay more in interest in the long run.

Consolidation vs. Refinance

Many student borrowers don’t know their options, so the first thing you should do is consider the kinds of loans you have and what you can do with them. If you have multiple federal student loans and want to simplify your payments, you may want to look into consolidation. When you consolidate your student loans, you’re essentially rolling them together into one loan with a single interest rate and monthly payment. Consolidation may be necessary if you’re trying to access certain repayment plans, such as income-based repayment, but it otherwise doesn’t change the terms of your loan or lower your interest rate. Again, this option is only available for federal student loans.

Refinancing, on the other hand, allows student borrowers to combine both federal and private student loans into a new loan with a new rate. This option is only available through private lenders, which means that if you refinance your federal and private student loans, they will become one loan under a private lender.

The big catch with refinancing is that you lose access to the benefits available through federal student loans, including income-driven repayment plans, student loan forgiveness, deferment, and forbearance. If you’re in sound financial footing and are confident you won’t want to use of these benefits in the future, refinancing could be for you.

Important Things to Know About Student Loan Refinancing

  • You can refinance federal student loans with a private lender, but you’d be giving up a few benefits if you do. Federal loans can qualify for income-driven repayment plans as well as extended periods of deferment and forbearance, while few private lenders offer unemployment protection.
  • Most lenders require borrowers to have very good or excellent credit to qualify for their lowest refinance rates, which typically means a FICO score of 740 or above. You may be able to qualify with a lower credit score, but you’ll likely pay a higher interest rate if you do.
  • Make sure to compare interest rates across multiple lenders as well as any loan fees you’ll have to pay.
  • See if you can get pre-qualified online without a hard inquiry on your credit report. Many lenders offer this option, and it can be helpful if you want to know the rate you might pay if you refinance.

The Best Student Loan Refinance Companies of 2020

Before you sign up with the first student loan lender offering refinancing, take the time to compare several options and what they offer. Each company has different underwriting guidelines, which means some lenders may offer you better terms than others.

Dozens of private lenders offer student loan refinancing, and we highlight some of the most popular ones below. Nevertheless, you’ll still need to do the math and figure out if they’re the best lender for your particular financial situation.

The Best Student Loan Refinance Companies

The following reviews include brief highlights of each lender and why you might want to consider them. All of our choices offer online pre-qualification, which doesn’t impact your credit, and either limit or eliminate extra fees.

Credible Review

Credible is a private student loan marketplace, which means it doesn’t issue loans directly but puts you in contact with lenders that do. Credible makes it easy to compare student loan refinancing offers from at least 10 lenders at once and only requires a single loan application that borrowers can complete in as little as two minutes.

What makes this platform different from other marketplaces is that it provides personalized rate quotes as opposed to estimates, and you don’t have to leave Credible’s site to view your rates.

While interest rates and terms vary depending on the lender you choose, Credible’s lending partners don’t charge prepayment penalties or any origination, application, or hidden fees. Credible doesn’t charge for their matching services either. Instead, partner lenders who operate on the platform pay Credible a commission for signing you up.

Variable loan rates through Credible’s partner lenders — which include PenFed, Brazos, Citizens Bank, College Ave, ELFI, and SoFi, among others — start at 2.23% APR (PenFed) while fixed rates start at 3.10% APR (Brazos).

Minimum credit score requirements will vary depending on the lender.

Summary of benefits:

  • Compare offers from 10+ lenders in one place
  • Fixed-rate loans start at 3.95% APR
  • No origination, application, or hidden fees

Earnest Review

Earnest takes a unique approach to student loan refinancing by offering loan terms based on the monthly payment you can afford to make. If what you can spare is $1,000 a month, Earnest will tailor the length of your loan to that amount, even if it means having an irregular term of 10.5 years. In fact, the company offers 1 to 3-month intervals between 5 to 20 years or up to 180 different term length options.

Other perks of refinancing through Earnest include being able to adjust your payment date each month (pushing it back by up to seven days), scheduling weekly payments to save on interest, and skipping one payment every year up to 12 times over the life of the loan.

Variable rates from Earnest start at just 3.5%, while fixed-rate loans start at 4.25% APR. Its minimum credit score requirement is 650, but Earnest considers other data besides credit scores to determine interest rates. The lender also takes into account the applicants’ savings patterns, employment history, career trajectory, and 401(k) investments. Those who pose less risk get lower rates.

To be eligible for a refinance loan through Earnest, borrowers must be refinancing a loan for a completed or soon-to-be-completed degree with a minimum balance of $5,000 or $10,000 for California residents.

Applicants must also have at last six months of on-time payments to qualify. They should also have no prior history of bankruptcy or foreclosure and enough savings to cover at least two months of living expenses and loan payments.

Summary of benefits:

  • Customize your loan term by what you can pay
  • Fixed-rate loans start at 3.35%
  • Minimum credit score of 650
  • Skip a payment on your student loans every 12 months

Splash Financial Review

Splash Financial is another loan marketplace connecting student borrowers with banks and credit unions that offer refinance loans. The company’s website doesn’t specify which institutions it partners with, but we called Splash ourselves to inquire about this and were told some of its partners include Laurel Road, PenFed, and U-Fi.

It must be noted that, as some of Splash’s underwriting partners are credit unions, applicants will likely be required to become credit union members if they are matched with one such institution and agree to its rates and terms. While this may not be ideal for some, there are benefits to doing business with a credit union, so we encourage you to read more about the lender you’re matched with before going through with the application.

Variable interest rates with Splash start at just 1.99%, while fixed rates start at a low 3.20% APR for “the most qualified borrowers.” The company doesn’t state a minimum credit score requirement or other qualification criteria, presumably because they vary by lender. On the plus side, partner lenders don’t charge any origination, application, or early repayment fees.

As an added perk, Splash Financial gives borrowers a $250 cash bonus for each friend they refer who successfully refinances their student loans through its marketplace.

Summary of benefits:

  • Fixed interest rates start at 3.20%
  • No origination, application, or hidden fees
  • Get a $250 cash bonus for each friend you refer who refinances their loans

CommonBond Review

CommonBond offers 5-, 7-, 10-, 15-, and 20-year loan terms with variable interest rates starting at 1.76% and fixed interest rates ranging from 3.21% to 6.45% APR.

Like other lenders, CommonBond takes into account your education, credit, and income to determine eligibility and loan rates. Borrowers with “strong credit” and a steady income who have at least a bachelor’s degree with a U.S. higher education institution have the best odds of getting approved and snatching the lowest possible rate.

Loan rates will also depend on the type of loan and term length you choose, so make sure to check out this handy table with the average APR ranges, monthly payment amounts, and total interest for each loan type and term based on a $10,000 loan.

What sets CommonBond apart from other student loan lenders is that it offers more borrower protections than similar options. It extends forbearance due to economic hardship, allowing borrowers to pause payments for three months at a time, up to 24 months over the life of the loan.

CommonBond also offers academic deferment for up to 32 months for those who want to go back to school and a grace period of six months for recent graduates who refinance with the company. Finally, if the borrower dies or becomes disabled, the company will discharge the loan even if there is a cosigner.

Summary of benefits:

  • Fixed interest rates from 3.21% to 6.45% APR
  • No origination, application, or hidden fees
  • Up to 24 months of forbearance during financial hardship

How to Find the Best Student Loan Refinance Companies

The best student loan refinance companies are those that are transparent about their fees, offer competitive rates and flexible terms, and provide borrower protections in the event of economic hardship.

No Hidden Fees

Since the primary goal of refinancing is usually saving money, it’s crucial to make sure you’re not paying unnecessary fees, especially if you didn’t know about them beforehand. For the purpose of this guide, we only considered lenders that don’t charge origination, application, or hidden fees.

Competitive Interest Rates

We looked for lenders that offer the best interest rates to consumers with good credit. If your credit score is below 650, you might want to consider working on improving your score before you apply to refinance your loans. Most lenders offer the best rates and terms to borrowers with good to excellent credit.

Flexible Repayment Terms

We also looked for lenders who offer flexible repayment terms, as well as the option to pick a monthly payment and repayment timeline. Having some flexibility is crucial for borrowers looking to refinance for a specific goal, such as lowering their monthly payment or paying their loans off within a particular timeframe.

Forbearance

Lenders who let borrowers pause their student loan payments, skip a payment or apply for temporary forbearance also were considered. While you may never need this benefit, it’s nice to know you have the option to skip payments if you lose your job or face unexpected expenses.

How to Find the Best Student Loan Refinance Deals

You landed on this page because you want to refinance your student loans, but there’s plenty more you can do to make sure you secure the best new loan for your goals. Before you apply for refinancing, consider the following steps.

Compare Multiple Lenders

The most important step you can take is shopping around to compare loans and interest rates from multiple lenders. While you can check refinance rates on each lender’s website, it can also make sense to use a marketplace that allows you to get multiple quotes at once. Just make sure you understand the terms of the service and how much of your information will be shared with third parties.

Remember that even a small interest rate reduction can mean thousands of dollars in interest payments or interest savings. While all the lenders on our list offer competitive rates, one might offer you a lower rate than others based on your income, credit score, and other factors such as your education or employment history.

Check for Hidden Fees

Make sure to check for hidden fees that could eat away at any potential savings you may obtain from refinancing your loans. You should avoid lenders that charge origination or application fees or prepayment penalties.

Choose a New Loan that Aligns with Your Goals

Once you’ve compared all your loan options in terms of the interest rate you might pay and any required fees, compare loan terms and monthly payment amounts. Some lenders let you build your loan around the monthly payment you want to make, while others only offer repayment terms of 5, 10, or 20 years.

Summary: Best Student Loan Refinance for 2020

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