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5 Tips For Getting the Lowest Rate When Refinancing Student Loans

August 11, 2016 · 5 minute read

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5 Tips For Getting the Lowest Rate When Refinancing Student Loans

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt. Click here to read the other posts in the series—and get all the info you need to make intelligent decisions about your student loans.

Refinancing student loans can feel like serious financial spring-cleaning. But it doesn’t have to. Just consider it life simplification—the kind that can save you money. At SoFi, we’re all about helping you manage your money in ways that work best for you — not for some other guy.

Consolidating multiple student loan balances into one new loan with a low-interest rate and monthly payments designed around your life isn’t a big ask in our world. In fact, it’s an everyday occurrence. And it’s not hard. The key is to strategize.

Getting approved for student loan refinancing isn’t just a matter of submitting an application. You need a game plan —one that will help you become a strong loan candidate, who’ll land a quick “yes” and a lower student loan interest rate. Here’s how to begin.

5 Point Plan for Getting a Low Rate

1. Check your credit.

Although some companies consider your credit score as refinancing criteria, SoFi doesn’t. But we do take a look at your credit report. “A bankruptcy or medical bills that have gone to collections will harm your chances of securing the best student loan interest rate, or even getting approved at all,” says Amanda Wood, Director of Business Development at SoFi, who refinanced through the company.

“But you can improve your credit score by paying off overdue bills, decreasing debt in general, and always paying bills as they’re due.” It will take time for changes to register with credit bureaus, so don’t apply for refinancing until that happens.

See Also: How to Choose Between Variable and Fixed Rate Student Loans

If you have a good history of paying off debt, on the other hand, that will work in your favor. Use annualcreditreport.com to grab a free copy of your report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—to make sure there are no errors. If everything looks good, you’re all set to apply. But if you see inaccurate information on your report, contact each bureau individually and ask them correct it.

As an extra precaution, if you tend to rely a lot on plastic, consider cooling your credit spending for a few months before applying for a new loan. “Alternatively, you can stick with credit cards but make two or three payments each cycle to keep your balances low,” says Wood. “Even if you pay off your cards in full every month, a credit snapshot may catch your balances at their highest points, making you look maxed out. So timing is everything.”

2. Take a hard look at your cost of living.

It’s a fact—some cities are more expensive to live in than others. Plus, some people can’t afford to live alone. Someone renting an apartment in a small Midwestern town, for example, has lower expenses than someone who owns a row home in San Francisco. And cost of living matters a lot to refinancing companies.

To some extent, this is out of your hands; your zip code helps lenders determine your cost of living. But anything you can do to pay down debt and make choices that free up more cash—such as renting a smaller apartment, taking on a roommate, or leasing a cheaper car—can help your case.

(In a city like Manhattan, you probably don’t even need a car.) If you’re planning on relocating to an inexpensive city, for example, consider submitting an application a couple of months after you move in.

How you budget also plays a huge role in loan application acceptance. “If you’ve got ample wiggle room in your cash flow every month, you’re a more appealing candidate than a person who’s scraping his savings to make student loan payments,” says Marcos Fernandez, a Project Marketing Manager at SoFi, who refinanced his loans with the company.

Taking the time to establish your spending may give you a boost with lenders. “It’s very helpful to have a budget in place to determine the maximum amount you can pay toward a loan each month,” says Fernandez.

If you find a lower rate for student loan refinancing –
SoFi will match it AND give you $100.*


3. Give lenders a complete history.

Unlike other lenders, SoFi considers things like where you went to school and how you’re doing professionally when we weigh your application. So provide as much information as you can when it comes to your undergrad and grad degrees. “If you’ve studied math, science, business, or engineering at a good school, that may give you an advantage, particularly if you earned an advanced degree,” says Wood.

Additionally, be sure to include all relevant work experience. “The longer you’ve been in the working world, the more knowledge and skills you’ve likely gained,” adds Wood. “This makes you very attractive as an applicant, because you look like someone who will continue to pay the bills.”

If there’s a job offer on the horizon, be sure to submit your offer letter with your application. And if you get a promotion while your application is under review, notify the lender immediately. But if you’re in line for a promotion that will positively affect your paycheck, wait until that’s materialized before you apply.

Related: 10 Questions to Ask When Choosing a Student Loan Refinance Lender

4. Show all your income.

When lenders ask for income information, they mean all of your income, not just job earnings. So remember to list dividends, interest earned, bonuses, and the extra money you make from your side hustle or Airbnb rental property. “The higher your income, the more cash you have to throw at the refinancing equation,” says Fernandez. “It all counts as long as you can prove it.”

So keep those pay stubs, interest statements and tax returns. Also, make sure your driver’s license is current and that your student loan statements are all correct. If you’re self-employed, wait until you’ve filed your taxes to apply for refinancing—it’s the easiest way to prove the previous year’s income.

5. Be flexible.

If you have a number of student loans and you’re not offered the best rate when you apply for refinancing, consider refinancing only a couple of them. You may snag a lower interest rate with a smaller refinance balance. You can always apply for the full balance down the road after you’ve received a raise or moved to a less expensive location.

Being flexible also means you might want to think about asking a friend or relative for help if your application isn’t as strong as you’d like. “Consider adding a co-signer,” suggests Wood. “If you’ve been declined, a co-signer might help you get approved. If you’ve qualified for a loan on your own but the rate isn’t where you want it to be, a co-signer might help you qualify for a better rate.”

The stronger you are as a student loan refinancing candidate, the better your chances of getting the best rate possible. And with a great rate, you might even find yourself with a little extra cash each month— money you can put toward a well-deserved vacation or, even better, becoming a homeowner in the not so distant future.

See if you qualify for student loan refinancing, and then share this article with friends who might benefit from some student loan smarts.


*Guaranteed Rate Match Offer: Your pre-qualified rate, and the rate match program itself, are conditional upon our verification of your application information, including verification of sufficient income to support an ability to repay. Eligible documentation of a competitor’s rate offer, issued within 30 days of your SoFi pre-qualified rate, will be determined at SoFi’s sole discretion and must be for the same loan amount and term. SoFi will only match rate offers for private student loan refinance products. The match will be on the rate, exclusive of all discounts. The $100 Rate Match Bonus is not available to residents of Ohio. To receive the $100 Rate Match Bonus, you must: (1) register and/or apply for a student loan refinance (2) provide documentation of an eligible competitive rate offer; (3) call at (855) 456-SOFI (7634) or chat on SoFi.com and follow the instructions to send in your proof of lower rate; (4) have and provide a valid US bank account to receive bonus; (5) complete Form W-9; (6) and meet SoFi’s underwriting criteria and book a student loan refinance with SoFi. Once conditions are met and the loan has been disbursed, you will receive your Rate Match bonus via automated clearing house (ACH) into your checking account within 30 calendar days. Bonuses that are not redeemed within 180 calendar days of the date they were made available to the recipient may be subject to forfeit. Bonus amounts of $600 or greater in a single calendar year may be reported to the Internal Revenue Service (IRS) as miscellaneous income to the recipient on Form 1099-MISC in the year received as required by applicable law. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult your tax advisor to determine applicable tax consequences. Additional terms and conditions may apply. SoFi may discontinue this program at any time.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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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