All Your Student Loan Refinancing Questions Answered

Student loan refinancing is the process of combining existing loans into one new loan, frequently with a lower interest rate and different repayment terms.

Borrowers can potentially save thousands of dollars and lower their monthly payments through student loan refinancing. If you are a borrower thinking about refinancing your student loans, here are some answers to frequently asked questions.

Why should I refinance my student loans?

  • To consolidate multiple federal and private student loans into a single loan with a single monthly payment
  • To lower the interest rate on your current student loans
  • To lower your monthly payment
  • To remove a cosigner from your student loans

Are there fees associated with student loan refinancing?
Most student loan refinancing lenders do not charge fees, but some do have origination fees. If you are looking to compare lenders, be sure to look at the APR rates, which will include all fees.

Can I refinance federal and private student loans together?
Most student loan refinancing lenders can refinance both federal and private student loans into one new loan, which can have a variety of terms ranging from 5 to 25 years with fixed and variable rates. It is important to know that you do not have to consolidate all of your loans. If you want to, you can choose to refinance only your high interest rate student loans.

How is student loan refinancing different than student loan consolidation?
Most borrowers who consolidate student loans do so for the convenience of making one monthly payment. Consolidation is the process of combining your loans into a single loan with a single payment. Unlike consolidation, student loan refinancing allows the borrower to combine their loans while also seeking better interest rates and repayment terms.

Which lenders can refinance student loans?
There are over a dozen lenders in the student loan refinancing space today including traditional banks, credit unions, and new alternative lenders. Some lenders refinance borrowers with high balances, while others focus on graduate students or niche markets, so it is best to shop around to find the best option for you.

Will I have to give up federal benefits if I refinance my federal student loans?
If you refinance federal student loans, some benefits, such as income-based repayment, will be lost. Some student loan refinancing lenders offer repayment options, such as interest-only payments during the first few years of repayment. Perks can differ from lender to lender, so make sure to check with each lender.

Do refinanced student loans also have benefits like deferment and forbearance?
Some student loan refinancing lenders offer deferment options. Many lenders will allow you to defer your student loan payments if you choose to go back to school, though interest will still accrue during this time.

Do I need a cosigner to refinance my student loans?
You do not need a cosigner to refinance your student loans, though it is often beneficial to have one. Having a cosigner with a strong financial profile and good credit history can help you get offers with lower interest rates. Student loan refinancing can also be a good way to release your cosigner from your current loans or to add a cosigner who, with some lenders, can be released after a few years of on-time payments by the borrower.

What are some incentives for student loan refinancing?
Beyond the great savings student loan refinancing can bring, lenders usually offer additional incentives for borrowers. This can be through auto-debit reductions or cash back rewards. Some student loan lenders also offer support for entrepreneurs or help to those who are between jobs.

How do I refinance my student loans?
You should research and compare different student loan refinancing lenders to see which lenders you may qualify for, and which student loan refinancing terms and products could be best for you. Your student loan balance, school of attendance, and financial history may be factors that determine which lenders provide you with offers.

Check out Credible to compare firm, personalized refinancing offers from multiple lenders by filling out one simple form.

Kristen Caron is a member of the DailyWorth Connect program. Read more about the program here.

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