Consider refinancing your student loans with a private lender to reduce costs and expedite debt repayment. However, bear in mind that if you have federal loans, there are potential drawbacks. While top lenders may still provide access to certain benefits offered by Federal Student Aid, such as payment pauses for educational pursuits or financial difficulties, you may lose out on loan forgiveness programs and income-driven repayment plans.
Assess whether the trade-offs are worthwhile based on your circumstances. If you do not anticipate utilizing the aforementioned benefits and have a stable job with a sufficient salary to comfortably manage standard repayment, one of these lenders could assist in achieving your financial objectives.
Here are some top choices for student loan refinancing:
– Rhode Island Student Loan Authority: Best for low fixed rates
– SoFi: Best for low variable rates
– Earnest: Best for flexible payments
– Laurel Road: Best for medical professionals
– Credible: Best for comparison shopping
For more details on our selection criteria and why these lenders were chosen, refer to our methodology.
Pros of SoFi:
– Variable rates capped at 13.95%
– Accepts noncitizens, including DACA recipients
– Option to refinance parent loans into child’s name
Cons of SoFi:
– No refinancing for a program you’re currently attending
– No cosigner release
– Does not refinance residency or bar loans
Why SoFi is recommended:
SoFi is a top choice for variable interest rates due to its low margin rates and a cap of 13.95%. It is one of the first online lenders to become a licensed bank, making its variable-rate loans affordable and safe. SoFi also allows refinancing of parent loans into a child’s name, a feature not commonly offered by other lenders. Additionally, it accepts a wide range of nonresidents, including DACA recipients. However, SoFi lacks transparency regarding deferment and forbearance details and has limitations on refinancing certain types of loans.
Pros of Earnest:
– Generous deferment and forbearance options
– Option to skip payment annually
– Death and disability discharge
– No degree required
Cons of Earnest:
– Not available in some states
– Recently acquired by Navient
– No cosigner release
Why Earnest is recommended:
Earnest stands out for its competitive interest rates, flexible payment options, and generous deferment and forbearance offerings. It provides up to 36 months of financial hardship assistance, including forbearance and interest-only repayments. Earnest also allows skipping a payment every 12 months without questions, after six months of on-time payments. The lender also offers disability loan discharge. However, Earnest’s maximum interest rates are relatively high compared to other leading student loan refinancers.
Earnest4 is a refinancing option that requires a six-year waiting period before refinancing debt from an incomplete degree. Recently acquired by student loan servicer Navient, it has faced legal action from the Consumer Financial Protection Bureau over its debt collection practices.
Laurel Road is deemed best for medical professionals, offering fixed APRs ranging from 4.74% to 8.90% and variable APRs ranging from 4.77% to 9.20%, with a variable rate cap of 15%. Terms are available from 5 to 20 years with a minimum amount of $5,000. The company provides forbearance and deferment options for natural disasters, economic hardships, military service, education, medical residency, or fellowship. Pros include deferment and reduced repayments for medical residency or fellowship, acceptance of associate’s degrees in medical fields, parent loan refinancing in a child’s name, and cosigner release. However, Laurel Road requires a degree or final term of a degree, has mixed customer reviews, and higher rates for those without a Laurel Road checking account.
Credible, on the other hand, is recommended for comparison shopping, offering fixed APRs between 3.99% and 11.09% and variable APRs between 4.35% and 12.09%. Terms range from 5 to 20 years with a minimum amount of $5,000. Forbearance and deferment options vary by the lender you are matched with. The platform allows users to easily compare rates from multiple lenders and is transparent about its partners. While Credible offers a best-rate guarantee and a $200 gift card for refinancing with a non-partner lender, it is not a direct lender and may require additional research after receiving offers.
Engaging in the marketplace involves sharing personal information with multiple companies simultaneously, and assessing all of their privacy policies beforehand can be challenging. If you seek more detailed guidance beyond a quick review of your options, you may find Juno, a competitor of Credible, to be a preferable choice. Juno specializes in negotiating exclusive deals for its clients by grouping various types of borrowers together and securing special offers for the group, such as cash back or reduced interest rates. While Juno is a relatively new service with limited customer reviews, its innovative approach may earn it a spot on our list in the future.
🔽 Check your rate at Credible
Best student loan refinancing companies for 2025
Lender | Best for | Fixed APR | Variable APR | Maximum term
RISLA | Low fixed rates | 3.99% to 8.99% | None | 15 years
SoFi | Low variable rates | 4.49% to 8.57% | 5.39% to 9.99% | 20 years
Earnest | Flexible payments | 4.45% to 10.49% | 5.99% to 10.49% | 20 years
Laurel Road | Medical professionals | 4.47% to 8.90% | 4.77% to 9.20% | 20 years
Credible | Comparison shopping | 3.99% to 11.09% | 4.35% to 12.09% | 20 years
Methodology: How our editors select the lenders in our list
Our editors employ a two-step process to identify the top student loan refinancing providers. Initially, we evaluated 21 companies offering student loan refinancing based on criteria such as rates, eligibility requirements, customer feedback, and payment flexibility. After ranking lenders by numerical score, we selected the five most suitable providers for different borrower profiles or needs. This stage involves some subjectivity, as certain lenders may cater better to specific borrower types, like medical residents benefiting from Laurel Road’s deferment options.
The optimal time to refinance your student loans
The best time to refinance student loans is when you have established a career, possess a high credit score (ideally above 720), and anticipate financial stability throughout the loan term. This advice particularly applies to federal student loans. If contemplating refinancing federal loans, ensure you won’t need programs like income-driven repayment or federal loan forgiveness. Refinancing with a private lender means forfeiting access to these federal benefits.
For private student loans, consider waiting until your credit score and income have improved since taking out the original loan. If you applied with a cosigner and desire to remove them, wait until your credit score allows solo qualification for the loan.
🔍 Learn more: Should you refinance your student loans? Current
To find the most suitable lender that aligns with your priorities and needs, it is essential to compare the following key factors:
– Annual Percentage Rates (APRs): Take note of the minimum and maximum fixed and variable rates offered by the lender. If considering a variable rate, also check for the variable rate cap. This information is typically found in the fine print.
– Minimum Loan Amounts: While some lenders do not have a maximum borrowing limit, all have a minimum requirement. Typically set at $5,000, some may require a minimum debt amount of up to $10,000.
– Maximum Loan Terms: While most refinancing providers do not charge a fee for early repayment, the maximum term influences the lowest possible monthly payment. Ensure the lender offers a term that suits your budget.
– Customer Reviews: Platforms such as the Better Business Bureau, Trustpilot, and Reddit can provide valuable insights into the borrower experience. Remember that reviews can be biased, with BBB leaning negative and Trustpilot leaning positive.
– Degree Requirements: Refinancing options may be limited if you have not completed a degree program. Some lenders may impose restrictions on the amount you can refinance or the rates applied.
– Other Eligibility Criteria: Certain lenders only cater to residents of specific states, while others may mandate U.S. citizenship or permanent residency. Verify that you meet all requirements before applying.
– Deferment Options: Consider lenders that offer deferment periods, allowing you to temporarily halt repayments for reasons such as further education or military service.
– Forbearance Options: Many refinancing companies provide hardship forbearance, enabling you to pause payments during financial difficulties such as job loss.
– Legal Standing: Prior to applying, ensure the lender is not subject to pending lawsuits or government actions.
Pros and Cons of Student Loan Refinancing:
✅ Potential Benefits:
– Lower Rates: Save money and reduce debt quickly with a lower interest rate.
– Lower Payments: Decrease monthly expenses by extending the loan term.
– Cosigner Release: Refinance in your name to remove a cosigner if the current lender does not offer this option.
– Manage Monthly Payments: Simplify payments by consolidating multiple loans into one.
– Switch Servicers: Refinance to a lender with a different servicer if dissatisfied with the current one.
❌ Potential Drawbacks:
– Limited Repayment Plans: Private lenders often require a standard repayment plan, unlike the varied options available for federal loans.
– Forgiveness Eligibility Loss: Refinancing with a private lender may make you ineligible for federal forgiveness programs.
– Relief Limitation: Refinancing federal loans may restrict access to deferment and forbearance options compared to federal loan benefits.
Do you remember when the government paused loan payments and interest due to COVID? Private lenders were not as lenient and had stricter requirements for refinancing. To qualify, you usually need a credit score of 670 or higher, a stable job, and excellent financial metrics. If you lack these qualifications, refinancing might not be the best option for you.
Consider these alternatives to refinancing:
– Federal loan consolidation: Merge all federal loans into one for easier repayment management.
– Cosigner release: Some private lenders allow you to remove a cosigner if your credit and income meet requirements.
– Repayment assistance programs: Some companies offer student loan payment aid as an employee benefit.
– Deferment or forbearance: Explore temporary relief options for monthly payments with your loan servicer.
– Lender negotiation: Contact your lender to discuss potentially lowering your rate or monthly payment.
– Federal forgiveness and discharge: Check for forgiveness and discharge programs for federal loans before refinancing.
For more information on student loan refinancing and managing finances, browse our library of personal finance guides. Remember that the difficulty of refinancing depends on meeting lender criteria, and lenders often offer autopay discounts. Whether it’s a good time to refinance depends on your financial situation and the economic outlook.
Consider refinancing with a lender that is more accommodating to unemployed borrowers. If you are uncertain about the timing of refinancing, it might be beneficial to schedule a consultation with a financial advisor. They can assess your overall financial situation and provide guidance on the best course of action.
The decision between consolidating or refinancing your student loans will depend on your objectives and the types of loans you hold. Student loan consolidation involves merging all your federal loans into a single Direct Consolidation Loan, which may not reduce your interest rate but could qualify you for additional repayment options, particularly income-driven plans. If you are contemplating federal forgiveness programs, consolidating your federal loans may be necessary.
Refinancing is an option for both federal and private loans, enabling you to combine them into one loan with a lower interest rate. However, refinancing means forfeiting federal perks such as income-driven repayment plans and forgiveness.
About the author: Anna Serio-Ali is a reputable lending specialist with expertise in consumer and business financing. With a background as a certified commercial loan officer, Anna has authored and edited numerous articles aimed at enhancing Americans’ financial knowledge. Her insights on personal, student, business, and auto loans have been showcased in various publications including Business Insider, CNBC, Nasdaq, and ValueWalk. In 2020, she was honored with an Expert Contributor in Finance badge from review platform Best Company.
Article reviewed by Kelly Suzan Waggoner. 📩 If you have feedback on this article or suggestions for future topics, feel free to contact our team at finance.editors@aol.com.
