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How to Refinance Student Loans in 4 Easy Steps

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Learning how to refinance student loans is simpler than it sounds. It involves shopping around for rates and applying with the lender offering the best deal. Then it’s a matter of waiting for that lender to pay off your old debt and issue your new, hopefully more affordable loan.

Of course, the question of how to refinance a student loan has finer details, such as the documents needed to proceed, plus how long the process takes.

Fortunately, even if you’re undecided about refinancing, it’s easy to browse offers with no impact on your credit score. Here’s a step-by-step guide on how to refinance student loans in just two to three weeks.

1. Check rates with multiple lenders

To easily refinance student loans, you should first window-shop. You don’t have to commit to one lender or offer. In fact, you can browse multiple offers without any risk to your credit score, and you’re under no obligation to choose one unless it would benefit you.

There are a variety of banks, online lenders and credit unions that refinance student loans. And you can enter your information and check rates in just a couple of minutes. Lenders such as SoFi, CommonBond and LendKey offer competitive interest rates, transparent practices and good customer service.

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Compare refinancing to see which would be best for you. Then check your rate by visiting the lender’s website and entering some basic information. Most lenders ask for the following:

  • Name
  • Address
  • Degree and university
  • Total student loan debt
  • Income
  • Monthly housing payment

Different lenders might have slightly different requirements, but the gist will be the same. You could also be prompted to create an account so you can revisit your information later.

After entering this data, the lender will instantly run a soft credit check. Again, this check won’t impact your credit score.

If your income and credit score meets the lender’s eligibility requirements, you’ll see a range of offers. Most lenders offer loans with five-, seven-, 10-, 15- and 20-year repayment terms.

You’ll also see variable and fixed interest rates. Variable rates can fluctuate with the market, while fixed rates stay the same over the life of your loan. Variable rates tend to start lower than fixed rates, but they could increase over time.

Generally, it’s only wise to choose a variable rate if you can pay off your loan fast. If you have a longer repayment term, going with a variable rate carries more risk.

2. Choose a lender and your loan terms

If you land some good offers, it’s time to choose a lender and a loan. Most borrowers go with the lender that offers them the lowest interest rate. Do the math with a student loan refinancing calculator to see how much you’ll save with a new interest rate.

You can also compare loan terms to help you choose a five-year, 10-year or longer repayment term. A longer term can help lower your monthly payments, but it could also mean more accrued interest over the life of your loan.

If you need to free up more of your monthly income, a longer term could be the way to go. But if you can manage higher payments, a shorter term will save you money on interest and help you get out of debt fast.

Besides interest rates, repayment protections might also factor into your choice. If your job is on shaky terms, for example, you might prioritize lenders with unemployment protection or economic hardship forbearance programs.

Finally, customer service could sway your decision. Online reviews offer good insight into how well a company treats its customers. If that’s an important element to you, do your homework before selecting your lender. You might start by testing its customer service’s responsiveness online over the phone, or by reading customer reviews written by other customers.

3. Have your documents ready and fill out the application

Before locking in your new interest rate, you need to submit a full application. You’ll upload documents, such as loan statements and proof of income. Plus, you’ll consent to a hard credit check at this point.

Here are the main documents and information that most lenders require:

  • Government-issued photo identification such as a driver’s license or passport
  • Social security card or number
  • Proof of income (pay stubs or a job offer letter)
  • Official statements for all your federal and private loans

If you’re applying with a cosigner, you’ll also provide that person’s information. You’ll upload any supporting documentation to your online account with the lender.

If anything is missing, the lender will notify you. You can also call or chat with customer service if you have any questions.

Feel free to call your current loan servicers if you’re not sure where to locate full statements. Statements need to show your original balance, date of disbursement and full history of repayment.

4. Keep paying your loans as you wait for approval

Even though you can browse initial offers in an instant, you may have to wait a few weeks for full approval of a refinancing application. The process usually takes two to three weeks to complete.

In the meantime, don’t stop paying your current loans. Only stop paying your current servicers when you get the green light from your new lender.

Once you’re approved, set up automatic withdrawals from your bank account so you don’t miss a payment. Many lenders offer an additional 0.25% discount on your interest rate when you set up autopay. You might qualify for an additional loyalty discount if you refinance with a bank where you already have a bank account.

Now that you know you can easily refinance student loans, it will only take a few minutes to check your rates and compare lenders.

If you find a good offer, you can submit a full application. Once you’re approved, you can say goodbye to your old loan servicers. Plus, your new interest rate could save you lots of money over the life of your loans. As long as you’ve thought through all the pros and cons of refinancing, it can be a smart way to get out of student debt faster.

FAQs: How to refinance student loans today

Banks, credit unions and online lenders have different eligibility requirements for refinancing education debt. Generally, you will need a credit score of at least 650 to qualify with most reputable lenders. A score into the 700s and above would further help you access lenders’ lowest advertised rates. If your credit score isn’t high enough, you could find a cosigner who does clear your preferred lender’s threshold.

The right time to refinance student loans is specific to your situation. If you have high-interest private student loans and the credit score to refinance, you should investigate refinancing immediately. It could save you a significant sum in interest over your repayment — check out our refinancing calculator above to get an idea of how much. But if you have federal student loans, it may not be the right time to refinance, considering the potential downsides.

Student loan refinancing is free and relatively easy to undertake, but there are potential negatives, particularly if your family finances aren’t secure. Refinancing federal loans, for example, might save you money or stress, but it would force you to give up your government-exclusive safeguards, such as income-driven repayment plans and loan forgiveness programs. Be sure that refinancing your federal (or private) loans is right for you before signing on the dotted line, as all refinancing decisions are irreversible.


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