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Can You Refinance Student Loans Without a Degree?

June 24, 2019 · 4 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Can You Refinance Student Loans Without a Degree?

In case you missed our text above the photo at the top of this post: SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. (In this case, SoFi does not offer student loan refinancing to consumers who don’t have at least an associates degree — more info here. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right.

If you enrolled in college but ultimately didn’t graduate, you’re not alone. In fact, more than half of American undergraduates never finish school. And of the 10 million students who attend community colleges each year, fewer than one in five end up completing an associate’s degree within three years. Among students pursuing Ph.D.s, about half drop out.

There are many reasons that college students end up dropping out. Some, especially those who are low-income or the first in their families to go to college, may feel unprepared, unsupported, and culturally alienated.

Other students can’t afford the rising price tag of higher education. Others leave because they realize that college isn’t the right path for them or because they need to fulfill family responsibilities, such as caring for dependents.

Just because you didn’t graduate with a degree, doesn’t mean that you don’t have to pay for your education. Many students who drop out, just like those who finish school, end up with a significant student loan balance.

If you’re in the former group, you may be wondering whether student loan consolidation for non-graduates is a possibility or if you can refinance student loans without a degree. The answer is … sometimes.

Here’s what you need to know to explore these options for getting your debt under control.

Federal Student Loan Consolidation Without a Degree

If you have more than one federal student loan, not having a degree doesn’t stop you from being able to combine them through a Direct Consolidation Loan. Doing so can be beneficial because it allows you to make just one payment every month, instead of many, potentially with multiple loan servicers. That can make things simpler for you and make it more likely that you’ll remember to pay your loans on time.

Another potential reason to consolidate is that you could qualify for a lower monthly payment by extending the term of the loan. Also, by consolidating, loans that wouldn’t otherwise qualify might become eligible for income-driven repayment plans or the Public Service Loan Forgiveness program.

Consolidation isn’t for everyone, however. If you end up extending the term of the loan, that means interest will have more time to stack up—meaning that though you might have a lower payment now, you’ll likely pay more in interest over time.

Plus, if you’ve already been making payments under an income-driven repayment plan or toward Public Service Loan Forgiveness, you could lose credit for those payments and have to start over.

You can apply for a Direct Consolidation Loan as soon as you leave school or are enrolled less than half-time. You’d submit an application through StudentLoans.gov . If your loans are still in the grace period, you can ask for the consolidation to be delayed so that it’s closer to the end of that period. If you receive the loan, you’ll need to start repaying it 60 days after it’s paid out.

What Is Student Loan Refinancing?

Student loan refinancing is similar to consolidation in that it involves combining multiple loans into one. The difference is that refinancing takes places with a private lender and may allow you to combine not only federal loans, but also private ones, or a mix of both.

You receive a new loan from the lender and use it to pay off your existing loans. For some borrowers, this new loan might come with a lower interest rate or lower monthly payment than their existing debt, particularly if they have a strong credit and employment history.

The downside is if you refinance federal loans, you give up protections and benefits that the federal government offers, including the opportunity to apply for deferment or forbearance during periods of economic hardship, or choosing an income-driven repayment plan to help make your loans more affordable.

Refinancing Student Loans Without a Degree

Unfortunately, many private lenders won’t allow you to refinance your student loans if you haven’t graduated.

SoFi and some other lenders require that you have earned at least an associate’s degree from a Title IV accredited school in order to be eligible for refinancing.

Title IV schools are eligible to process federal student aid under the Higher Education Act. You can verify whether the institution you attended is a Title IV school on the federal student aid website .

Even though some of the most popular lenders require you to have a degree, that doesn’t mean you can’t refinance student loans if you did not graduate. Some financial institutions may offer refinancing to borrowers who dropped out.

Refinancing Your Student Loans

Now that you know you have options, you may be able to apply for student loan refinancing. You can check your rates with several lenders (using a soft credit check, if possible) to compare rates and terms and see what you might pre-qualify for.

If you decide to complete a full application, the lender may ask for information like your Social Security Number, information about your loans and repayment history, your income, and your employment history. They typically complete a credit check to find out your FICOⓇ Score and look for any red flags, like a history of mixed payments, student loan default, eviction, or bankruptcy.

Those who don’t initially qualify for refinancing, or get a favorable rate, can try reapplying with a cosigner—someone who guarantees to repay the loan if they don’t.

If you feel you need a cosigner, one with strong credit history and a solid income and employment history (among other financial factors) could help you qualify. If you do use a cosigner, remember that if you default, any missed payments on your end may damage their credit.

Taking Control of Your Student Loans

Don’t be ashamed of not completing school. There are many reasons to take a different path. Still, it can be understandably frustrating to carry a student loan balance for a degree you don’t have.

But your student debt doesn’t have to rule your life. You can take the reins and apply for federal student loan consolidation or refinancing with certain lenders, even if you didn’t graduate. For many borrowers, that can help lighten the load.


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