Best Student Loan Refinance Companies
In the nearly ten years since I graduated college (!), the face of student loan debt has changed quite a bit. In my college days, we mostly joked about our loans. My classmates and I would look at our total debt number in comparison to our major and say, “Yeah, we’re going to be paying that off well into middle age…” or “We’ll probably have kids in school and still be paying these loans off.”
Now that there legitimately are many parents paying off their loans while putting their children through school (sometimes referred to as the “Sandwich Generation”), that joke doesn’t quite seem so funny. Nor does it seem so funny when facing my own 20 year repayment plan.
So why did my classmates and I joke about such a serious subject? Quite frankly, it was because that seemed to be the only thing to do. There was no way myself nor my friends could afford to pay for college out of pocket – and not getting a degree was simply not an option. We felt stuck in a situation that we couldn’t control and figured we’d deal with that bridge when we crossed it.
Well, the bridge has now been crossed.
So now we have a situation in which younger students are thinking twice before jumping into such a large financial decision…but there are still many others who are already tied into the debt and need a way to pay it off faster. Besides the obvious tactics of trying to cut costs and earn more, there is another even more efficient way to pay down this debt faster: refinancing the loans to cut down on the money paid into interest.
I’ve recently been through this process myself. I’ve known for a long time that there were ways to lower my interest rate but I simply never made the time to do it. I’d push it further and further down my to-do list until finally one day I just did it. The results were surprising – and I’m not just talking about numbers.
Refinancing my student loans made me feel (surprisingly) empowered. I’ve been laden with this debt for so long that I’ve sort of made peace with it. This debt was a price I paid for my education, an education that has benefitted me greatly. But the funny thing is, even when we have obligations that we make peace with, that doesn’t mean we can’t optimize the way we handle them.
If you’re ready to optimize your obligations and make the switch from passive student loan payer to active student loan slayer, then exploring your refinancing options is a great place to start. Here is a list of companies that focus on student loan debt refinancing.
Student Loan Refinance Companies
This is a list of companies I personally explored the option of student loan refinancing with. However, as student loan debt continues to grow, you may find that more companies like this pop up. Here are a few things to think about when evaluating any student loan refinancing company:
Do you trust this company and want to work with them? You’ll be with them for a long time so be sure this is a company you’re comfortable with. Contacting them and interacting before applying is a great way to test this.
Many companies offer fixed and variable rates – but it’s important to remember that variable rates come with more risk as they can increase at anytime at the discretion of the lender
When refinancing a federal loan, you will lose protections such as the Income Based Repayment Plan, deferrals and forbearance, and more. Find out if the company you’re applying with has similar protections such as economic hardship and unemployment forbearance programs.
And finally, remember that refinancing a loan doesn’t always equal a lower payment – the goal is to lower your interest rate so you can pay less on the loan or loans over time. In some cases, this can increase your payment if the loan comes with a shorter repayment term (such as 3 or 5 years) than you currently have. Could certainly be worth it – but make sure you can afford the change.
And now, let’s take a look at a few of the current top student loan refinancing companies:
Marketplace
Credible
Credible isn’t a lender, but rather a marketplace for lending that allows you to compare your rates to your peers and receive offers for better rates from various lenders. Offers through Credible can come from Citizen’s Bank, CommonBond, cuStudentLoans, Education Success Loans, RISLA, and SoFi.
Eligible loans: Federal and private loans
Rates: Will vary per lender
Fees: None, but there could be fees from the lender you choose
Bonuses: You can receive multiple offers at one time to make for easier comparison
General Lending and Peer-to-Peer Platforms
SoFi
SoFi is a non-traditional lender that offers help with student loans as well as other debt; and you can sign up as a borrower or an investor. SoFi evaluates applicants based on more than their credit score, also taking things like employment history into consideration.
Eligible loans: Federal and private loans
Rates: Variable as low as 2.66% and fixed as low as 3.63% (both with AutoPay)
Fees: No fee to apply, no origination fee, and no prepayment penalties
Bonuses: Unemployment protection, .25% savings through AutoPay, career services
Upstart
Upstart is another non-traditional lender that takes into consideration your area of study, academic performance, and more when evaluating your application. Upstart offers multiple types of loans and is available for both borrowing and investing.
Eligible loans: Various debt types are eligible for refinancing
Rates: Fixed rates as low as 6% (required repayment time of 3 years)
Fees: No fee to apply but there is an origination fee; no prepayment penalty
Bonuses: Potential hardship program if you become unemployed
Pave
Pave isn’t primarily for student loan refinancing. Rather they offer loans to cover whatever financial assistance you need in your lifestyle. (It could be a good option for student loan refinancing if the rates they offer are lower than your current rates.) Also available for investors.
Eligible loans: Various debt types are eligible for refinancing
Rates: Fixed rates as low as 6% (required repayment time of 2-3 years)
Fees: No application or prepayment fees; there is an origination fee of 1-2%
Bonuses: Flexible grace period of 3-6 months
Specifically for Graduate Degree Holders
Common Bond
Common Bond offers loans for students as well as loan refinancing for young professionals with graduate degrees from a variety of schools and programs. It is also available to investors. If your graduate school or program is not on the list of eligible schools, you can email [email protected] to suggest adding your school to the list.
Eligible loans: Federal and private loans
Rates: For refinancing, variable as low as 2.65% and fixed as low as 3.625% (both with AutoPay)
Fees: No origination or prepayment fees
Bonuses: Financial hardship forbearance available, Academic forbearance available, .25% savings through AutoPay, Grace period of 30-60 days
Traditional Banks
Wells Fargo
You probably already know about Wells Fargo, one of the largest banks in the US. However, Wells Fargo also has a specific lending category for the refinancing of private student loans (not federal).
Eligible loans: Private loans
Rates: Variable rates as low as 3.75% and fixed rates as low as 7.24% (both with discount)
Fees: No application fee, origination fee, or prepayment penalty
Bonuses: .25% savings through automatic payments through Wells Fargo, .25% savings for customers of qualifying Wells Fargo checking accounts, or .50% savings for customers of the Wells Fargo PMA Package
DRB
DRB (Darien Rowayton Bank) is a traditional bank based in Connecticut that also has a student loan refinancing division. This refinancing is specifically for multiple different bachelors and masters program graduates as well as for parents who took out loans to help their children finance a bachelor’s degree.
Eligible loans: Federal and private loans
Rates: Variable rates as low as 2.63% and fixed rates as low as 3.5% (both with discount)
Fees: No origination fee or prepayment penalty
Bonuses: .25% savings through EFT (Electronic Funds Transfer from a DRB checking account)
Charter One
Charter One is a division of RBS Citizens (Citizens Financial Group) and dedicated to refinancing student loans with a product they call the Education Refinance Loan. With Charter One, you can actually combine various savings offers to your loan.
Eligible loans: Federal and private loans
Rates: Variable as low as 2.55% and fixed as low as 4.99%
Fees: No application or origination fees
Bonuses: .25% savings through automatic payments through Charter One and .25% savings for customers of other qualifying accounts with them
Special Note: The Difference Between Refinancing and Consolidation
One particularly confusing aspect of student loans is understanding the difference between student loan refinancing and student loan consolidation. In fact, in researching these companies, I sometimes found it difficult to remember which kind of company I was looking at since the marketing language is so similar. As you research these companies and any new ones that may come up, make sure you know the difference between refinancing and consolidation:
Consolidation could lower your monthly payment, but not necessarily by lowering your interest rate – consolidation is simply combining all loans into one and may or may not decrease your rate
Consolidation could in fact extend your repayment period in order to lower your monthly payment – which could cause you to pay more in interest over the life of the loan and cause you to remain in debt for a longer period of time
Refinancing is the act of obtaining a new loan at a lower rate, which saves you money over the life of the loan. But again, remember that this could increase your monthly payment (though it will also decrease your time in debt).
In general, if your goal is to pay less on interest and pay your loans off faster, refinancing is going to be what you’re looking for. However, there may be times when consolidation can help you achieve this as well – just be sure to check for the repayment period and interest to see if one or both are less than what you currently have.
One Response to “Best Student Loan Refinance Companies”
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BE CAREFUL if you are just looking to shop around for rates. Somewhere hidden in their initial account creation small print is permission to run your credit. A hard credit run can negatively affect your credit score resulting in worse loan terns. If you really want to use this company, maybe it’s fine but call them on the phone or online chat first and state clearly you are not yet ready to have your credit run until you know for sure you want to go with them. Most places put much more obvious sections that tell you you are about to consent to have your credit run. I don’t respect companies that hide important terms in their small print. Having several credit hits in a row can drop you an entire credit tier.