We've compiled an ever increasing list of student loan questions & answers to help you get the best result for your loan situation.
The Top Two Questions We Get Are:
Who are the best lenders for student loan refinancing?
Who are the best private student lenders?
All Student Loan FAQs
+ What is student loan refinancing?
Student loan refinancing is the process under which you can obtain a new student loan at a new interest rate. The process involves paying off your old loan by obtaining a new one. Through the process you can potentially get better loan terms (repayment terms, interest rate, etc.), that could save you thousands of dollars over the life of your student loan.
To see how much you could save by refinancing view our refinancing calculator.
+ Should I refinance my student loan?
Refinancing your student loan could be a good idea if you already have private student loans or have federal loans, but aren’t taking advantage of federal programs (forgiveness or income-driven repayment plans). In most cases you will also need good credit and stable income in order to qualify for refinancing.
Refinancing could save you thousands of dollars over the course of your loan, if you are able to get a lower interest rate.
To see how much you could save by refinancing view our refinancing calculator.
+ How do I qualify for refinancing?
In order to qualify for refinancing, most student lenders look for a credit score in the mid-600s and above, and steady income (having a current job or have a signed offer to start a job).
+ Who are the best lenders to refinance with?
The best lender for you will depend on your situation and what your priorities are. For many people their highest priority is the interest rate they can get. If this is your main priority, then we recommend that you apply for quotes with multiple lenders to see which lender quotes you the best rate.
If you are a borrower who is more concerned about repayment flexibility, (in the event of a change in job status or you are considering going back to school) you should choose a lender that provides payment postponement options or income-based repayment.
Getting your quote: When you apply for a refinancing quote, most lenders will do a soft credit check (this will not affect your credit score). Getting quotes from multiple sources will help you decide which lender is right for you. When you are ready to choose a lender and actually apply for refinancing, some lenders may perform a hard inquiry. Typically when you apply for multiple loans in a short window of time, credit bureaus will consider it “rate shopping”, which has less effect on your credit score than multiple hard inquiries.
+ Will refinancing cost me anything?
No. When you refinance your student loan, it will not cost you. Always read the fine print with your lender, to make sure you understand all the terms of your loan agreement.
+ What’s the difference between consolidation and refinancing?
This is a somewhat complicated question, especially since these terms are sometimes used interchangeably. For example, consolidation simply means combining multiple student loans into one loan, but you get different results by consolidating with the federal government vs. consolidating with a private lender. Student loan refinancing is when you apply for a loan under new terms and use that loan to pay off one or more existing student loans.
Consolidate vs. Refinance. Let’s break it down.
Here’s a simple overview of the different types of student loan consolidation, how they differ from student loan refinancing, and how to evaluate whether you should do one of these things.
Federal loan consolidation
Federal loan consolidation is offered by the government and is available for most types of federal loans—no private loans allowed. When you consolidate with the government, your existing federal loans are combined into one new loan with a new rate, which is a weighted average of your old loans’ rates.
This option doesn’t save you any money, but there are still a few potential benefits:
Fewer bills and payments to keep track of each month.
The ability to switch out older, variable rate federal loans for one fixed rate loan, which could protect you from having to pay higher rates in the future if interest rates go up. (Note: the last variable rate federal student loans were disbursed in 2006. Since then, all federal loans have been fixed rate.)
Lower monthly payments. But beware—this is usually the result of lengthening your payment term, which means you’ll actually have to pay more interest over the life of the loan.
Private loan consolidation
Like federal consolidation, a private consolidation loan allows you to combine multiple loans into one, and offers the same potential benefits listed above. However, the interest rate on your new, consolidated loan is not a weighted average of your old loans’ rates. Instead, a private lender will look at your track record of handling debt and other financial information to give you a new (ideally lower) interest rate on your consolidation loan.
Bottom line: when you consolidate student loans with a private lender, you are also in fact refinancing those loans.
Student loan refinancing
As noted above, student loan refinancing is when a new loan is used to pay off one or more existing student loans. If your financial situation has improved since you first signed on the dotted line, you may be able to refinance student loans at a lower interest rate, which can allow you to:
Lower your monthly payments.
Shorten your loan term to pay off debt sooner.
Save money on total interest.
Choose a variable interest rate loan, which can be a cost-saving option if you plan to pay off your loan relatively quickly.
Enjoy the benefits of consolidation, including one simplified monthly bill.
Unlike consolidation, student loan refinancing is only available from private lenders. And while most private lenders will only refinance private loans, a few, will refinance both private and federal student loans, so you can consolidate all of your loans into one.
Before you combine federal and private student loans, be aware that federal loans offer certain benefits and protections, such as Public Service Loan Forgiveness and income-driven repayment plans, which do not transfer to private lenders. If you’re considering refinancing, you should first find out if any of these benefits apply to you.
If you don’t anticipate needing or qualifying for federal loan benefits, getting a lower rate can save you a significant sum.
+ If I’m a co-signer can I refinance?
Whether you can refinance as a co-signer will depend on who the lender is. Some lenders that allow co-signers to refinance are: Citizens Bank, College Ave Student Loans, CommonBond, MEFA and RISLA. It is important to note that if you refinance with these lenders you’ll become the primary borrower.
+ If I’ve filed for bankruptcy can I refinance?
Yes, but it will depend on the lender and how long ago you filed bankruptcy. Lenders can require a certain amount of time to pass before they will refinance.
+ If I didn’t graduate can I refinance?
Some lenders will allow you to refinance if you didn’t graduate. Lenders that do refinancing if you haven’t graduated are: Citizens, RISLA, & MEFA.
+ If I didn’t go to a federally accredited school can I refinance?
Some lenders allow refinancing if you didn’t go to a federally accredited school. First you should see if your school is a federally accredited school. You can search the list here: Accredited List
+ After I refinance, can I postpone my payments if I go back to school or lose my job?
Yes, it many instances. However, private lenders aren’t required to offer the same protections that the federal government offers, and each lender has different payment postponement policies. When deciding which refinancing lender is right for you, you should review its policies for borrowers who return to school after refinancing.
+ Can my child refinance my parent PLUS loans?
Some private lenders (CommonBond, Laurel Road, Purefy, & SOFI) allow parents to transfer PLUS loans to their children. Both the child and parent will have to meet the lenders criteria.
+ What are private student loans?
A private student loan is a loan that is issued by private lenders (including banks, credit unions, and other types of lenders) and is not issued by the federal government. Interest rates for private loans are determined by the lender, based on its underwriting criteria (borrower credit history, income, etc.).
+ Are there any downsides to private loans?
Private loans can be a great option to lower your monthly payments by getting a better interest rate. However, there are some things to consider when thinking about applying for a private student loan:
1) Private loans do not have income-driven repayment plans
2) Private lenders aren’t required to have forbearance or deferment options, and each lender has different payment postponement policies.
3) Private student loans may require an established credit record. The cost of your private student loan will depend on your credit score and other factors.
+ How do I qualify for a private student loan?
In order to qualify for a private student loan, most student lenders look at a combination of credit score and income. If you have low credit or no credit history you may need a cosigner. To see who we recommend for private student loans visit our Best Private Loan Lenders page.
+ What is a federal student loan?
Federal student loans are issued by the Department of Education. Interest rates are the same for every borrower, regardless of the borrower’s credit rating, income, etc.
To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSA®). Based on the results of your FAFSA, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or a part of the loan.
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