Fresh Out of School Archives

Jun

2025

Guide to Refinancing Private Student Loans

By Lisa Moran | Fresh Out of School, Student Loans, student_loan | No Comments

Private student loans are often used to bridge the gap between what a student receives in federal funding and the cost of attending college. While private loans can help students pay for their education, they don’t come with federal benefits such as income-driven repayment plans or forgiveness.

But there are ways to make private loan repayment easier. If you refinance private student loans at a lower interest rate and/or with more favorable terms than your existing loans, you can save money over the life of the loan. Here’s what to know about refinancing private student loans to decide if this option is right for you.

Key Points

• Private student loans lack the benefits of federal loans, including income-driven repayment plans and forgiveness options.

• Refinancing private student loans can lead to lower interest rates and better terms, potentially easing repayment and saving money over the loan’s life.

• Individuals with a stable job, good credit score, and solid financial profile may qualify for favorable refinancing terms.

• Combining private and federal loans through refinancing may simplify payments but will result in the loss of federal protections and benefits.

• Before refinancing, it’s crucial to assess overall finances, since improved credit scores and stable income can enhance chances of securing better loan terms.

Can I Refinance My Private Student Loans?

Borrowers can refinance private student loans if they qualify. If you have a steady job, a good credit score, and a solid financial profile, you may be eligible for a lower interest rate or better terms when you refinance student loans.

A new interest rate and loan term can mean a lower monthly payment — though you may pay more interest over the life of the loan if you refinance with an extended term. By contrast, a shorter term will likely raise your monthly payment, but you’ll pay off your loan sooner. A student loan refinancing calculator lets you crunch the numbers to see how different scenarios play out.

It’s important to note that the terms student loan consolidation vs. refinancing are often confused, but there are key differences between them. Those wondering how to consolidate private student loans should be aware that private loans can’t be consolidated, but they can be refinanced. Only federal student loans can be consolidated with a federal Direct Consolidation Loan.

💡 Recommended: Private Student Loan Refinance

Pros and Cons of Refinancing Private Student Loans

There are advantages and disadvantages to refinancing private student loans, and it’s critical to weigh them carefully when exploring whether to refinance.

Pros:

• You may qualify for a lower interest rate, which could save you money.

• Refinancing could help you get more favorable loan terms.

• Your monthly payments might be lower if you opt for a longer loan term.

• Combining your loans through refinancing can streamline your payments and make them easier to manage.

Cons:

• To get the lowest interest rates when refinancing, you’ll need excellent credit, which FICO® defines as a score of 800 or more.

• You’ll generally need a steady income, stable employment, and a low debt-to-income ratio to qualify for refinancing.

• Choosing to extend your loan term to lower your payments means you’ll end up paying more in interest over the life of the loan.

• Opting for a shorter loan term to pay off your loans faster means your monthly payments will likely be higher.

How to Refinance Private Student Loans

Wondering how to refinance private student loans? If you’re interested in pursuing a private student loan refinance, here’s how to get started:

Prepare Your Financial Information

To provide a rate quote for you, most lenders will need some personal financial information, such as your total student loan debt, income, and an estimate of your credit score.

Check Rates With Multiple Lenders

When it comes to student loan refinancing rates, private lenders set their own rates and terms. That means it’s important to shop around. In addition to getting a rate estimate (which involves a soft credit check that shouldn’t affect your credit score), you’ll want to ask about any other fees (such as an origination fee), if there’s a prepayment penalty, and if they have any deferment or forbearance programs.

Choose a Lender and Apply

As you review the options, consider the amount of interest you’ll pay over the life of the loan and factor in the cost of any fees. Depending on how long the term length is, for example, the lowest interest rate might not translate to the lowest amount of total interest.

When you apply for refinancing, you’ll need to supply documents that back up the financial information you shared for the initial rate check. Depending on your credit and financial history, applying with a cosigner may help you secure a better interest rate. Be sure to continue to make payments on your existing loans while you wait for your new loan to be approved.

What to Consider Before Refinancing Private Student Loans

If you’re thinking of refinancing, odds are you’re hoping to lower your interest rate, simplify the repayment process, and save money. In order to get a low rate that will make refinancing worth it, it’s a good idea to look at your overall finances before you apply.

Lenders make offers based on a variety of factors including proof of a stable job, a healthy cash flow, a good credit score, and a reliable history of paying back previous debts. If you need to, take a few months to work on building your credit to increase your chances of getting a better interest rate.

If you’re considering refinancing your federal loans along with your private loans, make sure you won’t miss out on federal advantages down the road. For instance, if you plan to return to school full-time, you could be eligible to defer your federal loans while you’re back in school. Once you refinance your student loans, however, you’re no longer able to defer payment or have access to any other federal loan benefits.

Recommended: What Is Considered a Bad Credit Score?

Refinance My Private Student Loan

If you’re wondering whether to refinance your private student loans, it can help to look at the interest rates on your loans and your monthly payment amount. If you can refinance private student loans with better terms than your existing loans and you won’t need access to federal benefits for any federal loans, refinancing might be a good option for you.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can student loans be forgiven if refinanced?

No. If you refinance federal student loans, you’ll have a new private loan with new terms and you’ll no longer have access to federal benefits and protections, including forgiveness. Private lenders do not offer programs similar to the federal loan forgiveness programs.

Why would you refinance student loans?

Refinancing student loans allows you to replace your existing loans with a new loan with new terms. You may be able to save money if you refinance with a lower interest rate or if you shorten the length of your loan term to pay off your loan faster.

Refinancing can also give you the opportunity to change the terms of your existing loan to remove a cosigner, for instance, and also to simplify your repayment process by replacing multiple loans with a single loan.

Can I refinance both federal and private student loans?

Yes, you can refinance private and federal student loans with a private lender. When you refinance, you replace your existing loans with a new loan, ideally one with more favorable terms. If you refinance federal loans, however, you will lose access to federal benefits and protections.

Do I need a cosigner to refinance my private student loans?

Whether you need a cosigner depends on your credit and financial history. If you don’t have strong credit and a solid financial background, you may need a cosigner to qualify for refinancing in order to get better rates and terms.

How does refinancing private student loans affect my credit score?

Refinancing student loans may temporarily affect your credit score when you submit an application for the loan. That’s because lenders do a hard check on your credit, which can cause your credit score to drop a few points.

Can you refinance student loans multiple times?

Yes, you can refinance student loans multiple times — there is no limit on the frequency. However, one thing to keep in mind is that when you refinance multiple times within a fairly short period, the multiple hard credit checks involved may have a negative (although temporary) impact on your credit score.

Can private loans be consolidated?

The only way private student loans can be consolidated is through refinancing. Refinancing replaces all your old loans with one new loan with new terms. Federal student loans can be consolidated through the federal Direct Loan Consolidation program.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSLR-Q225-028

Jun

2025

A woman sitting with her laptop and holding a notebook and pencil as she works on student loan repayment.

Should I Consolidate My Student Loans?

By Sarah Brooks | Debt Payoff, Fresh Out of School, Student Loans, student_loan | Comments Off

In 2025, 42.7 million Americans collectively have over $1.77 trillion in student loan debt. If you are one of the millions with some form of student debt, you may have asked yourself, Should I consolidate my student loans?

Consolidation is a process that allows you to combine your student loans into one loan with one monthly payment. Simplifying the student loan repayment process might seem like a good idea, but there are a few things to consider before you consolidate your loans. In some cases, consolidating loans may disqualify you from certain federal student loan repayment programs and forgiveness. But other times, consolidation can allow you to lower your interest rates or shorten the amount of time it takes you to pay off your loan.

Read on to learn how student loan consolidation works, the pros and cons of the process, and when to consolidate student loans.

Key Points

• Consolidating student loans can simplify repayment by combining multiple loans into one.

• Reduced monthly payments and new loan terms are potential benefits of consolidation.

• Federal loans can be consolidated through the Direct Consolidation Loan program. Private student loan consolidation is more commonly known as student loan refinancing.

• Refinancing may offer lower interest rates, but refinancing federal loans results in losing federal benefits.

• Carefully consider the pros and cons before consolidating or refinancing student loans.

What is Student Loan Consolidation?

Student loan consolidation combines some or all of your student loans into one loan and makes repayment more manageable. There are both federal and private options when it comes to consolidating your student loans.

Private Student Loan Consolidation

Private student loan consolidation is more commonly known as student loan refinancing. This is when a private lender pays off all or some of your student loan debt and creates a new loan, which you will then make payments on. Ideally, when you refinance student loans, the new loan will have a lower interest rate and better terms than your previous student loans.

With a private lender, you can combine both federal and private loans. But if you refinance your federal loans you will lose access to federal student loan forgiveness programs, such as income-driven repayment plans. If you plan on using one of these programs now or at some point in the future, it’s best to hold off on refinancing federal loans. Instead, you could refinance just your private loans.

Federal Student Loan Consolidation

If you are hoping to consolidate federal loans only and want to keep access to federal forgiveness programs and other federal benefits, you can consolidate with a Direct Consolidation Loan through the U.S. Department of Education.

Consolidating through the federal student loan system doesn’t usually save you money; it simply combines multiple loans into one. Your new interest rate is a weighted average of all your loans’ interest rates, rounded up to the nearest eighth of a percentage point. Should you consolidate student loans, any unpaid interest on the loans you’re consolidating will be capitalized — that is, added to the principal of the new loan.

Consolidation may be particularly useful for borrowers who are pursuing federal student loan forgiveness or who are enrolled in one of the more flexible federal student loan repayment plans, such as an income-driven repayment plan.

You can also choose to consolidate your federal loans and refinance your private loans. If you go this route, you may be able to get the possible benefits of refinancing (lower interest rates, better terms) without losing the perks of having federal loans.

Before you consolidate or refinance your loans, you should consider the pros and cons of the process. Getting clarity on whether consolidation is right for you will help you make the right decision for your financial needs.

Benefits of Consolidating Student Loans

As you’re considering when to consolidate student loans either with a Direct Consolidation Loan or refinancing through a private lender, there are several advantages to keep in mind.

Simplified Repayment

Whether you choose a Direct Consolidation Loan or choose to refinance through a private lender, your loan repayment may be simplified. Managing multiple student loan payments might increase your chances of missing a payment. If you miss even one payment, you may risk damaging your credit score. Late payments may also stay on your credit profile for up to seven years.

Consolidating loans into one may help eliminate some of the stress of juggling multiple loan payments and may make repayment more manageable.

Fixed Interest Rate

When you refinance your loans through a private lender, your interest rate and terms will be based on your credit score, payment history, type of loan you’re seeking, and other financial factors. While requirements may vary by lender, applicants who meet or exceed the lender’s criteria may qualify for better interest rates and terms and save money over the life of the loan.

Borrowers can also switch from a variable to a fixed interest rate when refinancing through a private lender if they’d like a payment that stays the same every month (variable rates can fluctuate with market conditions).

With federal Direct Loan Consolidation, as mentioned earlier, a borrower’s interest rate is a weighted average of current loan rates rounded up to the nearest one-eighth of a percentage point, which means this doesn’t typically result in savings for the borrower. The borrower does, however, keep their access to federal loan forgiveness programs.

Flexible Loan Terms

Student loan consolidation may allow you to change the duration of your loan. If you currently have a 10-year repayment plan, for example, you may choose to shorten or lengthen the term of your loan when you consolidate or refinance. Typically, lengthening the term of your loan will reduce your monthly student loan payment but add up to more total interest in the long run.

Drawbacks of Student Loan Consolidation

Even though there are benefits of student loan consolidation, there are also drawbacks. Here are a few considerations to be aware of before consolidating student loans.

You Can’t Lower Interest Rates on Federal Student Loans When Consolidating

If you choose the Direct Consolidation Loan, generally you won’t see any savings. Because your new interest rate is a weighted average of your current loans rounded up to the nearest one-eighth of a percentage point, you will probably pay around the same amount you would have paid if you didn’t consolidate. In addition, any unpaid interest on the loan you’re consolidating will be capitalized — that is added to the loan principal.

If you extend your term, you may see your monthly payment decrease, but your total interest payments will increase.

On the other hand, if borrowers choose to refinance with a private lender, they may qualify for a lower interest rate, thus saving money over the term of the loan. They could also opt for lower monthly payments by extending their loan term. But they may pay more interest over the life of the loan if they refinance with an extended term.

Possible Disqualification from Federal Repayment Programs

Refinancing federal student loans with a private lender means you lose access to federal repayment programs, including the Public Service Loan Forgiveness Program (PSLF) and income-driven repayment plans.

Borrowers will also be disqualified from federal benefits such as student loan forbearance and deferment options, which allow qualifying borrowers to pause payments in the event of financial hardship.

Some private lenders may offer their own hardship programs, but policies are determined by individual lenders.

Student Loan Refinancing vs. Consolidation

Consolidating or refinancing student loans are terms that are used interchangeably, but they actually apply to two different types of loans. A federal student loan consolidation is when you combine federal loans through a Direct Consolidation Loan. This is done by the U.S. Department of Education.

A student loan refinance allows you to combine private and/or federal loans into one new loan and is done by a private lender. While this does effectively “consolidate” your loans, it’s different in some important ways from federal student loan consolidation.

Below are some differences and similarities between student loan consolidation vs. refinancing.

Student Loan Refinancing vs Consolidation
Refinance	Consolidation
Combines multiple loans into one	Combines multiple loans into one
Can refinance federal and private loans	Can consolidate federal loans only
Private refinance lenders may charge a fee	No fees charged
Credit check required	No credit check needed
Interest rate could be lowered	Interest rate is a weighted average of prior loan rates, rounded up to nearest one-eighth of a percent
Term can be lengthened or shortened	Term can be lengthened or shortened
Once refinanced, federal loans will no longer qualify for federal forgiveness or repayment programs	Loans remain eligible for federal forgiveness and repayment programs
Saves money if interest rate is lowered	Typically not a money-saving option

Key Takeaways

Understanding the benefits and drawbacks of student loan consolidation — as well as the difference between federal student loan consolidation and private refinancing — can help you make an informed decision about repaying student loans.

If you decide to consolidate your loans through student loan refinancing, you might want to consider evaluating a few options from different lenders, because requirements — as well as interest rates and loan terms — can vary from lender to lender.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can your student loans still be forgiven if you consolidate them?

If you consolidate your federal student loans with a Direct Loan Consolidation, you are still eligible for federal loan forgiveness programs. However, if you choose to consolidate your federal loans through a private lender, which is known as refinancing, you will no longer be eligible for forgiveness programs and other federal student loan benefits.

When is consolidating student loans worth it?

Consolidating student loans is worth it if you’re looking to combine multiple student loan payments into one. You can use a Direct Consolidation Loan for your federal loans and keep your access to federal benefits like income-based repayment programs or forgiveness.

Another option is to refinance your student loans through a private lender, which may give you a lower interest rate and lower monthly payment, but if you refinance federal loans, you lose access to federal benefits like forgiveness and income-driven repayment plans.

What are some advantages of consolidating student loans?

The biggest advantage of consolidating your student loans is that you combine them into one loan so you only have one payment every month. This makes it easier to track your loans.

If you choose to refinance your loans with a private lender, you may also receive a lower interest rate, which can help you save money. But if you refinance federal loans with a private lender, you lose access to federal programs like forgiveness and forbearance.

What types of student loans are eligible for consolidation?

The types of federal student loans eligible for consolidation through federal Direct Loan Consolidation include: Direct Subsidized and Unsubsidized Loans, Direct Plus Loans, Federal Stafford Loans from the Federal Family Education Loan (FFEL) program, FFEL PLUS Loans, and Federal Perkins Loans.

The types of student loans eligible for refinancing are federal student loans and private student loans. But refinancing federal student loans makes them ineligible for federal benefits such as income-driven repayment and federal forgiveness programs.

SOSLR-Q225-030

Jun

2025

Refinancing Student Debt With a Cosigner

By Kayla McCormack | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

If you’re interested in possibly refinancing your student loans, but you don’t think your credit history is strong enough, there are options that might help. One is to refinance student loans with a cosigner.

A cosigner could potentially help you qualify for a refinanced loan. But is taking out a new loan with a cosigner the right choice for you? There are pros and cons to carefully consider in order to decide if student loan refinance with a cosigner makes sense for your personal situation.

Table of Contents

What is a Cosigner on a Loan?
Can a Cosigner Refinance a Student Loan?
Finding a Cosigner
Pros and Cons of Having a Cosigner
Using a Cosigner When Refinancing Your Student Loans
Things to Consider if You’re Asked to Cosign a Loan
How to Remove a Cosigner After Refinancing
Refinancing Student Loans With SoFi

Key Points

• A cosigner with strong credit can help you qualify for student loan refinancing and potentially secure a lower interest rate.

• If you fail to make payments, your cosigner is legally responsible for repaying the loan, which can impact both of your credit scores.

• Refinancing federal loans with a cosigner makes them ineligible for federal benefits like income-driven repayment plans and loan forgiveness.

• Asking someone to cosign a loan is a big request—approach the conversation respectfully and demonstrate financial responsibility.

• Cosigners should understand the risks, stay informed about payments, and be prepared for potential financial consequences.

What Is a Cosigner on a Loan?

A student loan cosigner is someone who legally agrees to pay your debt, such as your student loan debt, in the event that you can’t make the payments yourself. The exact terms will vary based on the loan type and lender, but in general, this person signs your loan with you and accepts responsibility for your loan if you are unable to pay your debt.

Responsibilities of a Cosigner

A cosigner on a student loan agrees to take on equal responsibility for repaying the loan. Any late or missed payments or student loan default by the borrower could harm the cosigner’s credit.

How Cosigners Affect Loan Approval

When a borrower adds a creditworthy cosigner to their loan application, it could help approve their chances of qualifying for the loan and securing a lower interest rate if the cosigner has a strong credit and financial history.

Can a Cosigner Help You Refinance a Student Loan?

If you’ve decided to refinance a student loan, a cosigner may help you qualify if your own credit is not strong enough.

Creditors review a variety of factors to determine whether or not they will give someone a loan. Things like a low credit score or a credit history that’s not robust enough can serve as an indicator to lenders that an individual could be a credit risk. Adding a creditworthy cosigner could make a potential borrower appear less risky, since there’s another person — one with a strong financial and credit background — to help guarantee repayment of the loan.

One important thing to note about student loan refinancing — either with or without a cosigner — is that if you are refinancing federal student loans, they will be ineligible for federal benefits like income-driven repayment and federal deferment.

Finding a Cosigner

If you can’t qualify for a loan based on your own credit history or current income, student loan refinancing with a cosigner who has a strong credit history may help improve your prospects.

Who Makes a Good Cosigner

When choosing a cosigner, you want someone with a good credit history who also has steady employment and a good income. In addition, you want an individual you can trust to repay the debt in the event you can’t. And finally, because cosigning a loan is a big commitment, it’s important to choose someone you will feel comfortable asking.

How to Ask Someone to Be Your Cosigner

Being a cosigner is a big responsibility, so how you ask someone to cosign is important. Treat the request with respect. Be open and honest about why you need to refinance student loans with a cosigner. Explain, for instance, that you are recently out of school and don’t yet have a strong credit history. By applying with a cosigner you are more likely to be approved for a refinance loan and get a lower interest rate. Also, detail your plans for repaying the loan so the other person knows you are serious about and committed to handling your debt.

Should a parent cosign a student loan, or should any relative or friend for that matter, it’s important to make them aware of the responsibilities and legal obligations involved. In addition, be sure they are prepared to pay for the loan if you are not able to do so. They should also understand that anything negative regarding the loan, such as late payments, can affect their credit.

Pros and Cons of Having a Cosigner

Taking out a loan with a cosigner is a significant commitment, so it’s worth considering the pros and cons. What’s right for you will depend on your personal and financial situation.

One of the most notable benefits of refinancing with a cosigner is the potential to qualify for a loan that may not have been an option otherwise. A cosigner could also possibly help you qualify for a lower student loan interest rate than what you could receive on your own. If you have little to no credit history or bad credit, it could help to refinance student loans with a cosigner by giving you an opportunity to begin strengthening your credit over time.

On the other hand, there can be some drawbacks to refinancing with a cosigner. If you fail to make payments on your loan, your cosigner will be responsible for repaying your debt. As a result, missed payments will likely reflect on both of your credit histories. This could also negatively impact your personal relationship with your cosigner.

💡 Recommended: Student Loan Calculator

Using a Cosigner when Refinancing Your Student Loans

When you’re refinancing your student loans, enlisting a friend or family member to cosign your refinanced loan could help strengthen your loan application.

Again, keep in mind that acting as a cosigner has risks — if you don’t pay back your loans, your cosigner is on the hook. It’s a big request, so take some time to think about how you’ll make it. Here are some additional tips that may help inform your conversation:

1. Asking respectfully. You’ll want to broach the subject thoughtfully and respectfully. You’re asking the person for a serious commitment, so asking with tact to show you understand the gravity of your request is crucial.

2. Showing your dedication. As noted, it’s also important to make it clear to your cosigner that you’re going to be making timely payments on the loan. One simple way to do so is by providing them with regular updates.

3. Illustrating to your cosigner that you understand the intricacies of your loan. They’ll be responsible for the loan if you fail to make payments, so they’ll likely want to make sure you understand the responsibility you’re taking on — and asking them to take on.

Things to Consider if You’re Asked to Cosign a Loan

If you’ve been asked to cosign a loan, be aware that serving as a cosigner can come with consequences for your finances if the primary borrower fails to make payments. If you’re a family member or friend with excellent credit and a well-paying job, you could be a candidate as a cosigner. If you have some hesitation, here are a few steps you can take:

1. Talking it out with the borrower. The borrower is going to use your name and credit history to take out a loan. It can be helpful to understand why they feel they need a cosigner while making sure they have the means to repay the loan.

2. Following up often. Keeping the lines of communication open so you are aware of any issues can be helpful for both parties. If need be, you could discuss making payments on their behalf to avoid the impact of a late or missed payment on your own credit score.

3. Accepting negative outcomes. Even if you’ve done everything you can to ensure the borrower is trustworthy, something might come up where they let you down. Your credit score might take a hit and you might be responsible for making payments yourself. Remember that this could happen, so accepting it as a possibility may be helpful.

Cosigning a loan is a big responsibility that can have implications on your financial future, so take some time to consider the idea.

If you decide not to cosign, you can let the requester down gently by trying to help them think of some alternative options to secure the loan or money they need.

How to Remove a Cosigner After Refinancing

Some lenders allow cosigners to be removed from a loan through a cosigner release. This allows the cosigner to be officially released from the loan and all the responsibilities that come with it. Typically, the primary borrower has to apply for a cosigner release with the lender.

Depending on the terms of the loan, the cosigner may be able to be released if the primary borrower has graduated from college and meets certain requirements as stipulated by the lender. Typically these requirements include such things as the primary borrower making one to two years of on time payments, having a good credit report and no loans in default, and being in a stable job with a steady income.

If your lender doesn’t offer a cosigner release, another way to take a cosigner off your loan is to refinance your student loans again. When you refinance, you replace your old loans with a new loan that has new terms. If you can qualify for the refinance on your own, you won’t need to include the cosigner on the new loan.

Refinancing Student Loans With SoFi

If you’re interested in refinancing student loans but your credit isn’t strong enough, enlisting a trusted person with a strong financial background as a cosigner may help you qualify for a loan and/or get a lower interest rate. Or, if your credit has strengthened over time, and you can qualify on your own, you can consider refinancing without a cosigner.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How does adding a cosigner affect my interest rate?

A cosigner with strong credit and a solid financial background may help a borrower qualify for a lower interest rate when refinancing a student loan. Generally, the more creditworthy the cosigner is, the better a borrower’s chances of getting a lower rate.

What credit score does my cosigner need?

The credit score a cosigner needs for a student loan refinance depends on the lender’s specific criteria. Typically, many lenders look for a credit score of 670 or higher.

How long will my cosigner be responsible for my loan?

A cosigner is generally responsible for a loan until the loan is repaid in full. However, a cosigner may be able to be released from a loan through a cosigner release option — if a lender offers it and the primary borrower meets specific criteria set by the lender. Another option is for the primary borrower to refinance the loan again in their own name only, without the cosigner.

Do I need a cosigner for student loan refinance?

The specific requirements for refinancing a loan with a cosigner will depend on your credit history and income (among other factors) and the eligibility requirements of the lender. Borrowers who have a less than stellar credit history may find adding a cosigner to their application allows them to qualify for a student loan refinance and a more competitive interest rate.

Can I consolidate my student loans with a cosigner?

When you consolidate federal student loans through the Direct Consolidation Loan program, you combine all your current federal loans into a new loan with one payment. With Direct Loan Consolidation, you typically don’t need a cosigner.

Can a cosigner become the primary borrower?

In order for a cosigner to become the primary borrower of a student loan, the loan would generally need to be refinanced in the cosigner’s name.

SOSLR-Q225-025

Jun

2025

Student Loan Consolidation Rates: What to Expect

By Kayla McCormack | Fresh Out of School, Student Loans, student_loan | No Comments

It’s possible to consolidate or refinance your student loans into one loan with a single monthly payment. The major difference between these two options is that consolidation is offered through the federal government for federal student loans only. Refinancing is done with a private lender and can include both federal and private student loans.

Consolidating your student loans typically does not lower your interest rate. With refinancing, you get a new interest rate that could be lower, depending on your eligibility.

Understanding the differences between consolidation vs. refinancing — and the way student loan consolidation rates work compared to the way refinancing rates work — is critical before deciding to take the plunge.

Table of Contents

What Is Federal Student Loan Consolidation?
What Is Student Loan Refinancing?
Comparing Student Loan Refinancing and Consolidation
Private Student Loan Refinancing Rates
Why Interest Rates Aren’t the Only Thing to Consider
Steps to Apply for Consolidation or Refinancing
The Takeaway

Key Points

• Student loan consolidation combines multiple federal loans into one federal loan through the Direct Loan Consolidation program.

• The new interest rate from consolidation is the weighted average of previous loans, rounded up to the nearest one-eighth of a percent.

• Refinancing student loans through private lenders can include both federal and private loans, potentially lowering the interest rate based on personal credit history.

• Refinancing results in the loss of federal loan benefits, such as forgiveness programs and income-driven repayment plans.

• It’s crucial to compare both consolidation and refinancing options to determine which option best suits individual financial situations and goals.

What Is Federal Student Loan Consolidation?

You can combine all your federal student loans into one loan by taking out a Direct Consolidation Loan from the government. In order to get a Direct Consolidation Loan, you must have at least one Direct Loan or one Federal Family Education Loan (FFEL).

How Federal Consolidation Affects Your Interest Rate

When you consolidate student loans with the federal government through the Direct Loan Consolidation program, it does not typically result in interest rate savings. That’s because the new student loan consolidation interest rate is the weighted average of your prior interest rates, rounded up to the nearest one-eighth of a percent.

Benefits of Federal Loan Consolidation

Consolidating your loans may simplify the repayment process if you have multiple loan servicers. With consolidation, you combine all your loans into one loan with one payment. This can make it easier to stay on top of your payments.

Consolidation may also help lower your monthly payments by giving you up to 30 years to repay the loan. Just be aware that with an extended loan term you’ll end up paying more in interest over the life of the loan.

Finally, consolidating your loans may give you access to federal loan forgiveness through an income-driven repayment (IDR) plan, or the Public Service Loan Forgiveness (PSLF) program.

What Is Student Loan Refinancing?

When you refinance student loans, it means you are borrowing a new loan which is then used to pay off the existing student loans you have. You can refinance both federal and private student loans. However, it’s important to note that when you refinance student loans with a private lender, you lose access to federal loan forgiveness programs and payment assistance programs, such as income-driven repayment plans and student loan deferment.

How Refinancing Can Lower Your Interest Rate

When you refinance with a private lender, the new loan will have a new interest rate and terms, which are based on factors such as an individual’s credit history, employment history, and debt-to-income ratio.
Borrowers may have the choice between a fixed or variable interest rate. In some cases, borrowers who refinance to a lower interest rate may be able to spend less in interest over the life of the loan.

To get an idea of what refinancing your student loans could look like with a lower rate, you can use this student loan refinancing calculator.

Who Qualifies for the Best Refinancing Rates

Borrowers with a strong credit history, a stable income, a history of steady employment, and a low debt-to-income ratio typically qualify for the best refinancing rates.

In order to get the lowest refinancing rates, borrowers generally need an “excellent” credit score, which FICO defines as 800 or higher.

Recommended: How to Build Credit

Comparing Student Loan Refinancing and Consolidation

As previously mentioned, consolidation can be completed for federal student loans through a Direct Consolidation Loan. Refinancing is completed with private lenders and can be done with either federal and/or private loans.

There are pros and cons of consolidating and also of refinancing. For example, Direct Loan Consolidation allows borrowers to retain the federal benefits and borrower protections that come with their federal loans, while refinancing does not.

Depending on how a borrower’s financial situation and credit profile has changed since they originally took out their student loans, refinancing could allow borrowers to secure a more competitive rate or preferable terms. Consolidating doesn’t typically result in a lower rate or save borrowers money.

When Consolidation Makes More Sense

Consolidation may be the better choice for you if you have federal Direct or FFEL loans and if any of these factors apply to your situation:

• You need federal programs and protections like federal forgiveness or income-driven repayment plans.

• You want to streamline your monthly loan payments.

• You want to lower your monthly payments by extending your loan term for up to 30 years through a Direct Consolidation Loan. Just be aware that you’ll pay more interest over the life of the loan if you extend your loan term.

When Refinancing Is the Better Option

Refinancing may be the right option for you in the following situations:

• You only have private student loans or you have federal loans but don’t need the federal benefits that come with them.

• Your financial situation and credit profile have improved since you originally took out your student loans.

If you meet the criteria above, refinancing may allow you to secure a more competitive rate or preferable terms. An interest rate that’s even just a few percentage points lower than your current rate could save you thousands of dollars over the life of the loan.

Private Student Loan Refinancing Rates

It may be possible for borrowers to qualify for a more competitive interest rate by refinancing their student loans with a private lender. As noted previously, the rate you get typically depends on your total financial picture, including your credit history, income, and employment history.

Fixed vs. Variable Rate Options

Borrowers can choose between fixed rates and variable rates when refinancing. Fixed rate loans have a rate that remains the same over the life of the loan. Variable rate loans are tied to market conditions and may fluctuate up or down.

As of late May 2025, current student loan refinance rates with SoFi start at 4.49% APR with all discounts for fixed rate loans, and 5.99% APR with all discounts for variable rate loans.

Why Interest Rates Aren’t the Only Thing to Consider

Interest rates aren’t the only consideration when deciding whether to consolidate or refinance. It’s important to carefully weigh the other potential implications of both options.

Federal Benefits You Might Lose When Refinancing

If you refinance with a private lender, you’ll no longer be eligible for federal loan protections, including federal forgiveness, such as PSLF and Teacher Loan Forgiveness; access to income-driven repayment plans; and deferment and forbearance.

Term Length Considerations

With a Direct Consolidation Loan, you might pay more interest overall for your loans, since consolidation usually lengthens your repayment term.

With refinancing, you could choose to lengthen your loan term to reduce your monthly payments, but doing so will increase the amount of interest you pay over the life of the loan. A shorter loan term can help you repay your loan faster, but it typically increases your monthly payments.

With either option, think carefully about how the loan term could affect your payments in the near and long term.

Steps to Apply for Consolidation

If you’re interested in federal student aid consolidation, this is the process to apply:

1. The Direct Consolidation Loan application form is available online. Fill out the online application and submit it — the entire process takes less than 30 minutes, on average.

2. You can select which loans you do and do not want to consolidate on your loan application. For instance, if you have a loan that will be paid off in a short amount of time, you might consider leaving it out of the consolidation.

3. After submitting your application, it’s natural to wonder, how long does student loan consolidation take? The process is approximately four to six weeks from the date of submission, according to the Federal Student Aid office.

4. Remember to keep making payments on your loans during the application process until you are notified that they have been paid off by your new Direct Consolidation Loan. Your first new payment will be due within 60 days of when your Direct Consolidation Loan is paid out.

Steps to Apply for Refinancing

If you think student loan refinancing makes more sense for you, complete the following steps:

1. Research lenders. Private lenders that provide refinancing include banks, credit unions, and online lenders. Each one offers different rates and terms. Look at any fees they might charge, what kind of customer service they offer, and what their qualification requirements are.

2. Shop around for the most favorable rates and terms. Each lender uses different criteria to determine if you’re eligible for a refinance loan and what rates and terms you may get. To find the best deal, you can prequalify for refinancing with several lenders. Prequalifying does not involve a hard credit inquiry, so your credit score won’t be affected.

3. Choose a lender and apply. Once you’ve selected a lender, fill out and submit a loan application. Many lenders allow you to do this online. You’ll need to provide your personal, employment, and salary information as well as details about your student loans. Be sure to have documentation like pay stubs and loan paperwork on hand since you may need to provide it. The lender will do a hard credit check, which could temporarily cause your credit score to drop a few points.

4. Typically, you’ll learn whether you’re approved within several days — and in some cases, even on the same day. Keep an eye out for correspondence from the new lender about your new payments and due dates.

The Takeaway

Consolidating federal student loans can be done through the federal government with a Direct Consolidation Loan. The interest rate on this type of loan is the weighted average of the interest rates on the loans you’re consolidating, rounded up to the nearest one-eighth of a percent. When you consolidate, you keep your federal benefits and protections.

Refinancing student loans allows borrowers to combine both federal and private student loans into a single new loan with a new interest rate. The rate may be variable or fixed, and will be determined by the lender based on criteria like market rates and the borrower’s credit history. Again, refinancing will eliminate any federal loans from borrower protections, including income-driven repayment plans and federal forgiveness.

Depending on an individual’s personal circumstances, either consolidation or refinancing may make more sense. If refinancing seems like an option for you, consider SoFi.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Is it better to consolidate or refinance your student loans?

Whether it’s better to consolidate or refinance your student loans depends on your specific situation and goals. If you have federal loans and want to combine them all into one loan to streamline and manage your payments, consolidation may be an option for you.

If you have private loans and your credit and financial history are strong and you’re hoping to lower your interest rate, refinancing may make sense for you. Refinancing could also be an option to consider in this case if you have federal loans and won’t need to use any of the federal benefits they offer, such as income-driven repayment or federal forgiveness.

How much can refinancing save on student loan interest?

How much refinancing can save a borrower on interest depends on the interest rate they qualify for. Borrowers with a strong credit history, steady employment, and a stable income typically qualify for lower rates. In general, an interest rate that is even just a few percentage points lower than your current rate could save you thousands of dollars.

Can you consolidate private and federal student loans together?

Private loans are not eligible for federal student loan consolidation. The only way to combine private and federal student loans is through student loan refinancing with a private lender. However, refinancing your federal loans forfeits your ability to access federal programs and protections, such as income-driven repayment and federal deferment.

Does consolidating or refinancing student loans hurt your credit?

Consolidating student loans does not hurt your credit since no credit check is required. Refinancing student loans involves a hard credit inquiry when you submit a formal loan application. That may cause your credit score to drop a few points temporarily.

How often can you refinance student loans?

There is no limit on how often you can refinance student loans — generally, you can refinance them as often as long as you qualify for refinancing. That said, you’ll likely want to make sure that refinancing will save you money on interest and/or help you get better loan terms. Also, if you refinance multiple times within a certain period of time, the multiple credit checks involved could temporarily negatively impact your credit score.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Jun

2025

Should You Refinance Your Student Loans?

By Jody McMaster | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

If refinancing your student loans could save you money or make your monthly loan payments more manageable, it may be time to consider a refinance. When you refinance student loans, you replace your existing loans with a new loan from a private lender. Ideally, the new loan would have better rates and terms, if you can qualify for them.

Refinancing isn’t always the right choice, however. There are times when it may not be in your favor. If you’re wondering, should I refinance my student loans?, here’s what you need to know.

Key Points

• Refinancing student loans can potentially save borrowers money through lower interest rates and reduced monthly payments.

• A good credit score is needed to qualify for the best refinancing offers and terms.

• Borrowers who want to switch from variable to fixed interest rates (or vice versa) can do so by refinancing.

• Refinancing federal loans results in losing eligibility for federal forgiveness and income-driven repayment programs.

• Weighing pros and cons is crucial, especially for those with federal student loans, to determine if refinancing is beneficial.

When to Refinance Student Loans

There are several situations in which refinancing student loans makes sense, including these instances:

You Have Private Student Loans With High Interest Rates

If you took out private student loans to help cover the cost of school and the interest you’re paying is high, refinancing may help you get a lower rate. This is especially true at times when interest rates are lower overall and/or when your financial history is solid.

If you qualify for an interest rate that’s even just a few points lower than your current rate, you could potentially save thousands of dollars. This could be one of the times when to refinance student loans. A student loan refinancing calculator can help you crunch the numbers to see what your specific savings might be.

Or perhaps you need to lower your monthly payment to help save money. One way to do this is to refinance your student loans with a longer loan term. This will reduce your payments, however, you will end up paying more in interest over the life of the loan. You could also lower your payment by getting a lower student loan refinancing rate, if possible, and keeping the term the same.

Your Credit Score is Good

Your eligibility to refinance student loans depends in part on your credit score. If you’ve spent time building your credit and you have a stable job, you may qualify for lower student loan refinancing rates.

You can also consider applying for a student loan refinance with a cosigner. If your cosigner has a stronger credit profile than you, you may be able to land a better rate on your refinance.

You can usually refinance student loans right after graduating, and as often as you want after that. Most lenders charge no fees to refinance.

You Have Multiple Loans

If you have several different student loans, refinancing allows you to combine them all into one loan. Basically, when you refinance, you take out a new loan, and that loan is used to pay off your existing loans. You then make payments on the new loan. It streamlines the repayment process since you have just one loan payment to make each month.

You can refinance both federal and private student loans, or a combination of both types, but be aware that refinancing federal loans with a private lender will forfeit your eligibility for federal benefits and protections.

You Qualify for Refinancing

Whether you qualify to refinance student loans depends in part on your credit score, as noted, along with your financial history, employment, and debt-to-income ratio (your monthly income vs. expenses). If you qualify, and ideally, if you can get a lower interest rate, you can save money by refinancing.

You Want to Remove a Cosigner

If you have a cosigner on your student loans and you’d like to remove them, refinancing is one way to do that — as long as you have the credit and financial history to qualify to refinance on your own. To remove the cosigner, take out the refinance loan in your own name only. The cosigner will not have any responsibility for the new loan.

You Want to Switch to Fixed Interest

If you have student loans with variable rates, and you’re concerned that interest rates will rise, you may want to consider refinancing to lock in a fixed rate on the new loan.

You Are Willing to Give Up Federal Benefits

Borrowers with federal student loans need to understand that refinancing these loans into a private student loan will eliminate the ability to participate in income-driven repayment plans, Public Service Loan Forgiveness, and federal deferment and forbearance.

If you are using these benefits or you plan to, it’s not recommended to refinance your student loans. Instead, you could consider student loan consolidation vs. refinancing. A federal student loan consolidation combines multiple loans into one, with the interest rate being the weighted average of the loans you are consolidating rounded up to the nearest one-eighth of a percent.

IMPORTANT: The projections or other information generated by this quiz regarding the likelihood of various outcomes are hypothetical in nature, do not reflect actual results, and are not guarantees of offers.

When Not to Refinance Student Loans

Just like there are times when refinancing may be a wise choice, there are also times when it’s best not to refinance your student loans. You’ll generally want to rule out refinancing in the following situations.

You Want to Use a Federal Loan Forgiveness Program

If you have federal student loans and you’re planning on taking advantage of federal loan forgiveness programs that cancel some of your debt after you meet certain qualifications, refinancing is not the right option for you. Refinancing federal loans into a new private loan makes them ineligible for federal benefits and programs.

You Work in Public Service or Education

Borrowers working in a public service job or as a teacher or educator should think twice about refinancing. If you keep your federal student loans, you may be able to qualify for Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness. With PSLF, eligible borrowers who work in public service for a qualifying nonprofit organization or government agency may qualify for forgiveness from their remaining loan balance after making 120 qualifying payments.

With Teacher Loan Forgiveness, if you teach for five consecutive years in a low-income school or educational service agency and meet certain other qualifications, you may be eligible for forgiveness for up to $17,500 on certain federal student loans, including Direct Subsidized and Unsubsidized Loans.

Refinancing federal student loans means you lose access to these forgiveness programs.

You Need Flexible Repayment Options

If you need a payment plan that could make it easier to repay your federal student loans, income-driven repayment (IDR) is an option to consider. IDR plans base your payments on your discretionary income and family size. The repayment period ranges from 20 to 25 years on these plans.

There are three IDR plans borrowers can currently enroll in via an online application: the income- based repayment (IBR) plan, the income-contingent repayment (ICR) plan, and the Pay As You Earn (PAYE) repayment plan. On one of these plans, the IBR plan, the remainder of your student loan debt may be forgiven at the end of the repayment term.

If you refinance student loans, you will not be eligible for IDR plans.

You Have Poor Credit

Borrowers need good credit to qualify for refinancing, and they need good or excellent credit to be eligible for lower interest rates. If your credit is poor, it may be wise to hold off on refinancing and work on building your credit instead. You could always refinance later, when your financial situation improves and your credit is stronger.

The Takeaway

Knowing when and when not to refinance student loans is important. Refinancing your loans can make sense if it saves you money or helps you get more favorable loan terms. But if your credit isn’t strong enough to get a lower interest rate, or you have federal student loans and want to pursue federal programs like loan forgiveness, refinancing isn’t recommended.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can refinancing student loans reduce the cost of your total debt?

Yes, refinancing your student loans may reduce the total cost of your debt by reducing the amount of interest you pay over the life of the loan. You can do this by getting a lower interest rate (and keeping your loan term the same) and/or shortening your loan term.

What credit score do you need to refinance student loans?

The minimum credit score needed to refinance student loans varies from lender to lender, but according to FICO, a “good” credit score is 670 or higher. To get the best student loan refinance rates, you’ll want to have a good credit score and low debt-to-income ratio. If you don’t meet those requirements, you may want to consider refinancing with a cosigner or waiting until you build your credit.

How do I qualify for student loan refinancing?

To qualify for student loan refinancing, you need strong credit, a low debt-to-income ratio, and stable employment and a steady income. Some lenders may also require you to have your degree in order to refinance. If you don’t meet the refinancing qualifications, you could add a creditworthy cosigner to your loan application or wait to refinance when your financial situation improves.

What are the benefits of refinancing student loans?

The benefits of refinancing student loans include saving money if you can qualify for a lower interest rate, lower monthly payments if you extend your loan term, switching from a variable rate loan to a loan with a fixed rate, and removing a cosigner from your loan if that is something you are looking to do. Just be aware that refinancing federal student loans makes them ineligible for federal programs and protections.

Can student loans be forgiven if you refinance?

No, student loans cannot be forgiven if you refinance. Refinancing federal loans into private loans makes them ineligible for forgiveness. If you have federal student loans and you would like to pursue federal loan forgiveness, refinancing is not the recommended option for you.

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