A Guide to Refinancing Student Loans | SoFi

By Sarah Brooks. June 10, 2025 · 11 minute read

This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

A Guide to Refinancing Student Loans | SoFi

After graduation, the average student loan borrower has $38,375 in student loan debt, according to the Education Data Initiative. Meanwhile, the average graduate student holds significantly more — approximately $92,997.

If you’re looking for a little relief from student loan debt, one option to consider is student loan refinancing. Refinancing through a private lender may give you the opportunity to lower the interest rates on your loans and save money over the life of the loan.

However, refinancing federal loans means losing access to federal benefits, so make sure you fully understand the details about how to refinance student loans before moving forward. This student loan refinance guide has the information you need.

Key Points

•   Refinancing student loans replaces existing loans with a new loan, potentially lowering interest rates and monthly payments.

•   Borrowers with strong credit and income may qualify for better loan terms, while those with weaker credit might need a cosigner.

•   Refinancing federal student loans with a private lender removes access to benefits like income-driven repayment and federal loan forgiveness.

•   The refinancing process includes comparing lenders, choosing the best offer, submitting the necessary documents, and waiting for approval.

•   Extending the term of the loan can reduce monthly payments but may result in higher overall interest costs.

How Student Loan Refinancing Works

Student loan refinancing is the process of paying off your existing student loans with a new loan from a private lender. Ideally, the new loan would have a better interest rate or better terms. For example, a borrower may want to switch from a fixed rate loan to a variable rate loan or extend the term of the loan in order to lower their monthly payments. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

You might be wondering, is refinancing student loans worth it? To understand why a borrower might refinance, it helps to first understand the major components of a student loan. Every student loan is comprised of the following variables:

1.    The value of the loan (the “principal”)

2.    The interest rate on the loan

3.    The repayment period (also known as the loan’s term)

When a borrower refinances their student loan(s), they are typically looking to change either the second or third list item above, or both. Keep in mind that refinancing means forfeiting federal loan benefits such as income-based repayment plans, deferment, and forbearance.

7 Steps to to Refinance Student Loans

If you’re considering refinancing student loans, you’ll want to compare lenders and select the loan with the best interest rate and term. Once you choose a lender, you’ll apply for the loan and start making payments to the new lender.

Here’s a more in-depth look at how to refinance student loans in seven steps.

1. Should You Refinance Student Loans?

The first question you need to ask yourself is, “Should I refinance my student loans?” To answer the question, you need to know the specific types of student loans you have. Student loans come in two main varieties: federal and private.

Federal student loans are backed by the U.S. government’s Department of Education. These are the loans that borrowers apply for by filling out the Free Application for Federal Student Aid (FAFSA®) form. Private loans, on the other hand, are obtained through a bank, credit union, or online lender, and they are not backed by the U.S. government.

Determine which types of loans you have and which ones you want to refinance. Federal student loans, for example, can be consolidated into one loan with one monthly payment, known as a Direct Consolidation Loan. If you’re planning on using federal benefits, this option could be the best.

If you want to refinance private loans only or federal and private loans, you can explore a student loan refinance. Keep in mind, though, that you will lose access to federal benefits when refinancing with a private lender.

Next, ask yourself the following questions:

Am I planning on using a student loan forgiveness program?

Because refinancing is the process of paying off your existing loans with a new, private loan, you will lose access to the programs offered by federal loan programs, such as student loan forgiveness and income-driven repayment.

If you are currently working towards student loan forgiveness, you’ll probably want to think twice before refinancing your federal student loans.

Am I currently using an income-driven repayment plan?

Income-driven repayment plans that base monthly payments on discretionary income and family size are available for many federal student loans. Private loans don’t generally offer any such programs. If you need to keep your monthly payments low and have exclusively federal student loans, refinancing might not be right for you. Refinancing with a private lender eliminates your access to the federal income-based repayment plans.

Am I planning on using a forbearance or deferment program?

Both federal forbearance and student loan deferment allow the borrower to suspend their payments for a period of time and for a variety of reasons, such as economic hardship or military service. Student loan forbearance and deferment are for federal student loans only. If you think you may need this benefit in the future, it may not be in your best interest to refinance with a private lender.

Do I have a good or great financial history?

When you refinance your student loans, your lender will base your interest rate on your credit score, credit profile, debt-to-income ratio, payment history, and other financial data. If your credit score is less than ideal, you may not qualify for a lower interest rate, which could defeat the purpose of refinancing. It’s wise to be aware of where you stand credit-wise before moving forward with a refinance.

Recommended: Student Loan Consolidation vs Refinancing

2. Prepare Your Personal Financial Information

If you decide that refinancing is right for you, it’s a good idea to shop around with different lenders to check their student loan refinancing rates. Before you do that, though, you’ll want to have your basic personal financial information ready. This may include:

•   Name

•   Address

•   Total student loan debt

•   Income

•   Credit score estimate

The information a borrower needs to provide varies from lender to lender, but this gives you an idea.

3. Compare Lenders

Because student loan refinancing companies set their own rates and terms, it is important to do some shopping around. Not only will you want to get rate quotes, but you may also want to ask questions, such as:

•   Are there fees, such as origination fees?

•   Is there a prepayment penalty if I want to pay my loan off early?

•   Can the lender refinance both federal and private loans?

•   Is there a forbearance program if I am laid off from my job?

•   How do I access customer service?

•   What is the loan application timeline?

If a lender interests you, you can submit the information you gathered from Step 2. With this information, the lender will likely run a soft credit check. This should not affect your credit score, but make sure the lender guarantees it won’t.

If you meet a lender’s eligibility requirements, they’ll generally provide you with multiple offers, including offers with different term lengths and interest rates (both fixed and variable rates). This student loan refinancing calculator can help you crunch all the numbers.

4. Choose a Lender and Loan

After you’ve had the chance to review both the loan offers and the lenders themselves, it’s time to decide.

While many borrowers gravitate toward the loan with the lowest interest rate, it is worth remembering that the lowest rate might not amount to the lowest amount of total interest paid on a loan.

The longer the loan’s term, the more interest a borrower will pay. For example, if you have a loan term of 10 years, you’ll have to pay off the entire loan balance plus the interest that was accrued over the 10 years. But, if you extend your loan term 20 years, that means 10 more years of interest accruing on your loan.

Also, a loan that charges an origination fee could end up costing more than a loan with a higher rate of interest and no origination fee. Often, an origination fee is added to the balance of the loan, with the interest rate calculated on top of this new figure.

5. Gather Necessary Documents

Once you’ve chosen a lender and a loan, you’ll submit documentation that supports the information you provided during the initial rate check, as well as identifying information.

Although it will vary by lender, you’ll likely need some combination of the following:

•   Proof of citizenship

•   Social Security number

•   Paystubs, tax returns, or other income verification

•   Statements for all of the loans you are planning to refinance

If you are applying for a refinance with a cosigner, they will need to provide this information, as well.

6. Apply

Once you’ve gathered all your documentation, it’s time to apply for a refinance loan. The lender will then typically run a hard credit check and send the application through a final approval process.

A lender should inform you if any of your documentation is missing, but you may want to check back in after a few days if you haven’t heard anything.

7. Waiting for Approval

Once you’ve applied for the loan and submitted your documentation, all that’s left to do is wait for your approval. How long this process takes will depend on the lender, but it could be as short as 24 hours and as long as a couple of weeks. Check with each lender to be sure.

Once your loan is approved, consider signing up for autopay if the lender offers it. Many lenders offer a discounted rate — usually about 0.25% — for borrowers who have payments automatically deducted from their accounts.

Pros and Cons of Refinancing Student Loans

There are both pros and cons to refinancing student loans. For example, while you could receive a lower interest rate and lower monthly payment, you will lose access to federal benefits and programs.

Pros and Cons of Refinancing Student Loans

Pros

Cons

Lower interest rate possible Lose access to federal forgiveness and repayment programs
Lower monthly payment possible May pay more in interest over the life of the loan
Switch from fixed to variable rate, or vice versa Fees may be charged
Option to change the loan term Lose any remaining grace periods
Condense multiple loans into one loan with one payment Must have good credit to qualify for the best rates

Refinancing Student Loans With SoFi

You’ve learned how to refinance student loans and what the process entails. If you decide that refinancing is right for you, SoFi offers an easy online application, competitive rates, and flexible loan terms.

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

FAQ

What is the best way to refinance student loans?

The best way to refinance student loans is to shop around with different lenders to compare the rates and terms you can get. You can also ask about any fees involved, such as origination fees or prepayment penalties. Then compare the different offers you receive to decide which one is best. Besides the interest rates, consider the loan terms (a shorter term typically means higher monthly payments, and a longer term means you’ll typically pay more interest over the life of the loan), and how any fees might impact your payments.

Can I refinance both federal and private student loans together?

Yes, you can refinance federal and private student loans together. Just be aware that refinancing federal loans makes them ineligible for federal benefits like income-driven repayment plans and deferment. If you think you might need these benefits at some point, refinancing your federal loans is probably not the best option for you.

Does refinancing student loans mean the same thing as consolidating student loans?

Refinancing and consolidating student loans are similar, but they mean different things. A student loan refinance is done through a private lender and combines multiple federal and/or private loans into one loan with one monthly payment — ideally, with a lower interest rate or more favorable loan term. If you refinance federal loans, you lose access to federal benefits.

A student loan consolidation is done through the U.S. Department of Education and combines multiple federal loans into one. Your payment does not typically decrease, but you do keep access to federal benefits and streamline your monthly payments into one.

Can refinancing a student loan help to pay off debt faster?

Refinancing student loans could potentially help you pay off your student loan debt quicker. Ideally, when you refinance, you’ll reduce the amount of interest you pay and shorten the length of your loan. This allows you to pay less money in interest overall and get rid of your debt sooner. However, your monthly payments will typically be higher with a shorter loan term.

What are the downsides of refinancing student loans?

The biggest downside to refinancing federal student loans is losing access to federal benefits, such as repayment plans and forgiveness programs. However, if you are in a field that’s not eligible for forgiveness and you don’t plan on needing a deferment or forbearance, it could be worth the savings to refinance. It’s best to carefully weigh the pros and cons for your specific situation before moving forward.


To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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.

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 FOREFEIT YOUR EILIGIBILITY 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).

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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.



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