Are you considering refinancing private school loans? A consolidation loan can potentially lower interest rates, consolidate multiple loans, and offer flexible repayment terms. Be aware of the trade-offs, such as losing federal loan benefits if refinancing federal loans.
Click here to find the top options to refinance private school loans!
How does student loan refinancing work?
A private lender, such as a bank or one of the lenders offered by LendingTree, can refinance both federal and private student loans. By refinancing your loans, you will have one monthly payment for all of them. If your credit score is higher than when you applied, you should be able to score an incredibly low interest rate.
Refinancing your federal loans may not be a good idea if you intend to take advantage of federal loan forgiveness programs. Refinancing your federal student loans disqualifies you from forgiveness programs. The best way to lower your payments if you are ineligible for loan forgiveness is to refinance. Use our student loan refinancing calculator below to determine if refinancing is right for you.
Refinancing offers what benefits?
Your student loan repayment plan can be positively affected by refinance private bank loans. The following are some of the top benefits you may enjoy:
- Low interest rates: You may qualify for a lower interest rate, which can save you hundreds or thousands of dollars. When interest rates are low, refinancing is a good idea if you have a variable rate but want to lock in a fixed rate.
- You cannot shorten or extend your repayment term with your existing lender if you wish to accelerate your repayment or reduce your payment. You can choose a repayment term from five to 20 years when refinancing your student loans. Refinancing gives you the option of paying off your debt early or extending your term to lower your payment.
- Borrowers can take advantage of different features offered by each lender. By refinancing and moving your debt to a new lender, you may be able to take advantage of benefits that bank doesn’t offer.
- Refinance lenders allow parents to transfer debt to their children if they borrowed to pay for their child’s education. Your child must be able to qualify to take on the debt on his or her own, and both parties must agree. Even if they don’t, co-signing the loan application can still be a good way to offload payment responsibility.
Best Refinance Private School Loans
- Earnest
In comparison to other lenders, Earnest has two major advantages. It allows you to skip one payment every 12 months if you have made all your payments on time. That payment will still accrue interest at the end of your loan, so it’s not a free pass. Each time you use it, you’ll lose one month of forbearance, and you only have 12 months available to begin with. You can, however, add extra flexibility to your budget if needed.
Earnest also offers a wide range of loan options. Earnest offers as many as 180 term length options at intervals as short as one month, rather than forcing you to choose from a few options at five-year intervals. As a result, you can find a payment amount that fits your budget. It’s that simple to get a rate quote with Earnest: You tell them how much you can afford for a monthly payment, and Earnest takes it from there.
Also Read: Best PNC Bank student loan refinance options
- Credible
The Credible marketplace offers personalized prequalified rates from several companies at once, but it’s not exactly a lender. As a student loan refinancing matchmaking company, it also helps people find other types of loans. Credible is refreshingly transparent about which lenders it works with, so you know which lenders to avoid. With 10 lenders in its network, it makes rate shopping easy and fast.
With Credible, you’ll even get a $200 gift card if you find a better rate elsewhere from a non-partner lender. You’ll still have to research every company you’re matched with to see if they offer the features you’re looking for, if anything, beyond the lowest rate, as with any loan marketplace.
- Splash Financial
Splash Financial is a student loan marketplace similar to Credible. Unlike other lenders, Splash Financial is specifically for people looking to refinance their loans, and it works with an exclusive set of lenders. Therefore, you will be able to compare rates from multiple lenders at once, though Splash Financial does not disclose which lenders are in its network.
Because Splash Financial only acts as an intermediary, there aren’t too many downsides to using it. Its network of lenders, however, does not offer refinancing options to those who have not completed their degrees.
- SoFi
Compared to federal student loans, private student loan lenders don’t offer many perks. SoFi is an exception to that because it offers many borrower benefits, including an unemployment assistance program, one-to-one career coaching, financial planning, special events, Los Angeles-based SoFi Stadium lounge access, and more.
In addition, SoFi is one of the few lenders that allows graduates to refinance student loans that their parents took out for their benefit in their own name. This allows them to claim responsibility for repayment. Be aware, however, that applying with a co-signer can add extra time to your loan approval timeline. And once listed on the loan, there’s no way to remove a co-signer unless you re-finance in your own name alone.
- Discover
Refinancing student loans isn’t known for charging a lot of fees, but if you’re fee-averse, Discover is a good option. If you pay late, you won’t owe any fees (although Discover may still mark it on your credit reports, which can lower your credit score). Discover also offers more customer-friendly assistance programs than your typical lender. There are several options available for deferment and forbearance with Discover.
If you want to repay your loans sooner, Discover doesn’t offer refinancing repayment periods shorter than 10 years. Discover does not offer loan pre-qualification, so you’ll also need to submit a complete loan application.
FAQs
Which student loans should I refinance?
Refinancing high-interest private loans is the best option for you. Because you won’t lose potential repayment options, such as up to three years of deferment or forbearance, you won’t lose out. You don’t have to refinance all of your loans, so keep federal loans out of the refinance package. You can refinance federal loans if you do not intend to take advantage of any federal loan benefits-or if you intend to pay off your loans quickly. After the Covid-19 monthly payment freeze ends, however, you may want to consider doing so.
When is the best time to refinance student loans?
To refinance, most lenders require a degree, so wait until you graduate. Some lenders have more relaxed degree requirements, but they may want to see a history of on-time student loan payments (say, 12 months) first. With some exceptions, you must also be out of school to refinance.
If you don’t meet the credit and income requirements, but you still want to refinance, you can use a cosigner. It’s ideal to wait to refinance until you have the financial profile to be eligible as the sole borrower, however, due to the risk to their credit score co-signers take. Take the time to improve your credit score and refinance later.
Conclusion
If you have a good to excellent credit score, a steady income, or a co-signer meeting these criteria, you should consider student loan refinancing. The process of refinancing private school loans can be especially advantageous if your existing loans have high interest rates.
Several private lending companies offer refinancing of federal education loans from your parents, allowing you to transfer repayment responsibility to your name and relieve them of this obligation. As soon as you get a job or start earning money, you can do the same.
