After graduation, the average student loan borrower has $39,075 in student loan debt, according to the Education Data Initiative. Meanwhile, the average graduate student holds significantly more debt — approximately $106,129.
If you’re looking for some relief from student loan debt, one option to consider is student loan refinancing. Refinancing through a private lender may give a borrower the opportunity to lower the interest rates on their 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 before moving forward. This guide has the information you need about how to refinance student loans.
Table of Contents
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.
What Is Student Loan Refinancing?
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 the monthly payments on their student debt. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)
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 loans, they are typically looking to change either the second or third item above, or both.
Federal vs Private Student Loans
When considering refinancing student loans, you need to know the specific types of loans you have. Student loans come in two main varieties: federal and private.
Federal student loans are backed by the U.S. government’s Education Department. 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.
Both federal and private loans can be refinanced. But it’s important to be aware that refinancing federal loans makes them ineligible for federal programs and protections like forgiveness and deferment.
Recommended: Tips for Getting the Lowest Rate When Refinancing Student Loans
7 Steps to Refinance Student Loans
If you’re considering refinancing, 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 that, first determine what types of loans you have.
Once you’ve identified your loan types, think about which of those loans you might 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 (DTI) ratio, payment history, and other financial data.
If your credit score is less than ideal, and you are refinancing without a cosigner, 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.
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?
You might also want to ask about any flexible refinancing options a lender may offer. For example, it’s possible to combine refinancing and saving some money through a program like SmartStart refinancing from SoFi. With this program, borrowers pay only the interest on their student loans for the first nine months, and they can put their extra money into savings like an emergency fund.
Just be aware that the total repayment over the life of the loan may be slightly higher with this kind of program than it would be by making standard principal-plus-interest payments from the beginning.
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. Wait 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.
đź’ˇ Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.
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 |
When Refinancing May Not Be Worth It
Refinancing is not worth it if you have federal student loans and need access to federal benefits, such as income-driven repayment plans or forgiveness. When you refinance federal loans, you’ll lose access to those programs and protections.
Other instances in which refinancing may not be worth it include if you can’t get a lower interest rate or more favorable loan terms. For example, if you have poor credit and you don’t have a creditworthy cosigner, you probably won’t get a lower interest rate.
Refinancing Student Loans With SoFi
Now you know 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.
FAQ
What is the best way to refinance student loans?
One of the best ways 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.
Does refinancing student loans hurt your credit score?
Refinancing student loans may hurt your credit score temporarily. That’s because when you apply for refinancing, a lender does a hard credit check to approve your application. Hard credit inquiries typically cause a drop of five points or less in your credit score. Although a hard credit inquiry may stay on your credit report for up to two years, it may only affect your credit score for a few months to a year.
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. Education Department. 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 may be worth the savings to refinance. It’s best to carefully weigh the pros and cons for your specific situation before moving forward.
SoFi Student Loan Refinance
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Not all repayment options may be available for all loans. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is current as of 3/2/2026 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
SoFi Loan Products
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 Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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 .
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