Everything You Need to Know About Refinancing Student Loans

While student loans can be a major source of stress in one's life, the feeling of taking control of your student loans is empowering. If you've started to do some research into student loans, whether you already have them or are considering taking some out, you've likely heard about refinancing student loans. I will break down what student loan refinancing means, when it is recommended, and how to get started.

What is student loan refinancing?

Student loan refinancing is when a borrower chooses a private loan provider to pay off their existing student loans and in turn now has a new loan with that loan provider. Borrowers typically do this to save time, money and simplify their loans.

What are the benefits of refinancing student loans?

Typically, borrowers refinance their loans because the new loan provider offers them better terms. Better terms can mean a lower interest rate or lower monthly payments.

Another benefit is that all payments are now made to a single loan provider which makes the payment process easier. The borrower does not have to keep track of payment due dates and bills with multiple loan service providers.

What are the cons of refinancing student loans?

While I wouldn't say there are necessarily cons, there are some occasions where one should not refinance student loans.

If you plan to take advantage of any student loan forgiveness programs that only apply to federal loans, you should not refinance your federal loans to private loans. When you do this, you lose the ability to participate in forgiveness programs.

Also, many federal loans have programs such income based repayment plans or deferment programs which allow you to temporarily reduce or halt your payments in times of need. When you refinance, your new loan provider likely won't offer these flexible benefits.

Lastly, if you have poor credit or too high of a debt to income ratio and your rates would not be lower when refinancing, you should not refinance.

How do I refinance my student loans?

First, you should track down all of your existing loans including their amount and interest rate. Then choose a couple of loan providers like Sofi, CommonBond, or Laurel Road and submit a student loan refinance application. Once you receive quotes from the loan providers you applied to, choose the option that will save you the most money! If you'd like to be updated on when our step by step student loan refinancing guide is released, drop your email in the subscribe form below.

Now that you've made it to the end, you're one step closer to taking control of your student loans! I'm personally still working through my student loan journey and would love to hear your advice in the comments below!