The Benefits of Refinancing Student Loans
The Benefits of Refinancing Student Loans
There are many benefits to refinancing student loans that can help you achieve a variety of goals. The most obvious benefit of refinancing is the opportunity to save money on your student loans. The other main benefits include:
- lower interest rates
- reduced monthly payments
- shorter repayment term
- saving money over the loan
- consolidating payments
- adding or removing a cosigner
- gain a financial advocate
- getting a quote without damaging your credit
Lowering Interest Rates
One of the primary benefits of student loan refinancing is the opportunity to lower your student loan interest rate or adjust the type of interest rate you have. Private lenders offer interest rates based on a variety of lending criteria such as credit score, credit history, and income.
If you have good credit and stable income, you could qualify for a lower interest rate by refinancing your student loans. When refinancing, you also have the opportunity to choose between a fixed or variable rate loan. Learn about the difference between fixed vs variable interest rate student loan refinancing.
Consolidating Loans Into One Monthly Payment
Another benefit of refinancing is that it gives you the ability to consolidate your student loans into one simple monthly payment. Consolidating multiple student loans through a private lender like ELFI can help streamline the payment process and save borrowers money if they can reduce their interest rates or choose alternate loan terms.
While the federal government does offer student loan consolidation through the Direct Loan Consolidation program, this program rounds up your weighted average student loan interest rate to the nearest one-eighth percent. Because of this, student loan consolidation and refinancing through a private lender can be considered more beneficial. Learn about student loan consolidation vs. refinancing.
Beyond the financial savings, refinancing is worth it for the peace of mind and simplicity of one monthly student loan payment. Going forward, you’ll have just one loan servicer and one monthly payment to remember.
Adjusting Your Loan Terms
When you refinance your student loans, you can choose a different repayment term that matches your goals. You could choose a loan term of 5, 7, 10, 15, or even 20 years. Choosing a longer repayment term may reduce your monthly payments, while a shorter repayment term may help you pay off your debt faster and save you money in interest over your loan term. For instance, if a borrower has already paid five years of a ten-year repayment term, he or she may be able to refinance the outstanding amount to ten or fifteen more years, thereby lowering their monthly payment amount.
Refinancing your student loans and paying a lower monthly payment could decrease your debt-to-income ratio which may make it easier to qualify for a mortgage or other large purchase. Borrowers should, however, avoid the temptation to extend the term too much, as longer terms generally increase the overall cost of the loan.
See how much you could save by refinancing with ELFI with our student loan refinancing calculator. Keep in mind that shorter repayment terms are typically associated with lower interest rates and longer repayment terms are typically associated with higher interest rates. Learn how you can weigh your options by choosing the right student loan repayment terms.
Benefits of Adding or Removing a Cosigner
By refinancing your student loans, you have the opportunity to remove any cosigners on your original loans, including removing parent cosigners from student loan agreements. This can be beneficial if you no longer need a cosigner on the loan. Parent PLUS Loans are also eligible for refinancing, allowing parents to relieve their burden of debt. However, in most instances, cosigners can’t refinance student loans on their own.
Conversely, if you have a limited credit history or your income is insufficient to qualify for refinancing, adding a qualified cosigner who is willing to guarantee your loan could increase your chances of qualifying to refinance. Even if you already qualify, adding a more qualified cosigner could help you earn a lower interest rate. Learn more about refinancing with a cosigner.
Transferring Parent PLUS Loans
In order to pay for their children to go to college, some parents will get a Parent PLUS loan to cover the cost. It’s important to note that there is no direct process to transfer Parent PLUS Loans to your child, but you can refinance them to your child. Refinancing Parent PLUS Loans may also offer you the opportunity to consolidate other debt associated with financing your child’s education. If you have Parent PLUS Loans and have also cosigned private student loans for your child, your Parent PLUS Loans and their private student loans that you cosigned can be consolidated together by refinancing with a private lender like ELFI.
Gain a Financial Advocate
Just as in any industry, the level of customer service among banks and lenders varies from one company to another. When considering refinancing with any lending institution, borrowers should research and compare each lending institution’s ability to help customers with any issues regarding their student loan refinancing package. In order to maintain a happy, working relationship, borrowers should talk to the company itself and look for customer reviews that describe the company as one that works for the client, is informative, hard-working, dependable, friendly, and flexible. The personal loan advisors at Education Loan Finance specialize in student loans, and we provide our borrowers with information so they can determine the best solution for their monthly budget.
Getting A Quote Without Hurting Your Credit Score
Another benefit of refinancing student loans is the ability to receive an estimated rate without affecting your credit score, which eliminates the risk of prequalifying. Getting a rate quote from student loan refinancing lenders like ELFI allows you to prequalify in minutes with only a soft credit check, which does not affect your credit score. This way, you can find out how much you can save before submitting a full application and receiving a hard credit check.
Does Refinancing Student Loans Save Money?
Refinancing student loans can save a borrower money on interest rate payments if the term length is shortened. You can save money by refinancing student loans and achieving a lower monthly payment. With a lower monthly payment, you can free up money for other expenses you have.
Our student loan refinancing calculator allows you to see what you could save by refinancing your student loans with ELFI. Input your current student loan debt, monthly payment, and your interest rate or term length, and our calculator will automatically generate estimates based on the information you entered. You can see estimates for both fixed and variable rate loans, as well as term lengths of 5, 7, 10, 15, or 20 years.*
*The calculated monthly payments and savings are estimated based on the loan information you entered and the loan term you selected. Your actual payments will depend on the exact amount of your loan balance, and specific rates are subject to approval. ELFI variable rate loans are based on either the three-month LIBOR or the Prime Rate of Interest (see paragraph below for clarification) and may change monthly. Changes in the LIBOR or Prime Rate of Interest may cause your monthly payment to increase. Although the interest rate will vary after you are approved, the interest rate will never exceed 9.95% APR.
Please note: New variable rate ELFI loans applied for after 7:00 PM EST on January 7, 2022, will use the Prime Rate of Interest appearing in the Money Market section of the Wall Street Journal (WSJ) as the benchmark rate index. Borrowers who have an existing variable rate ELFI loan(s) that use the London Interbank Offered Rate (LIBOR) as the benchmark rate index will continue to have LIBOR as the benchmark rate index on their loans. ELFI will notify borrowers with existing variable rate loans originated prior to 7:00 PM EST on January 7, 2022, of the expected change from LIBOR to an alternative benchmark rate index in the future.
Compare Student Loan Refinancing Rates
|Fixed Rates APR|
5.48% - 8.94%
5.24% - 9.99%
4.96% - 9.79%
5.24% - 10.99%
|Variable Rates APR|
5.28% - 8.99%
6.24% - 9.99%
5.49% - 9.74%
4.99% - 10.89%
5, 7, 10, 15, or 20 years
5, 7, 10, 15, or 20 years
5 to 20 years
5, 7, 10, 15, or 20 years
|US News Rating|
Qualifying for Student Loan Refinancing
Take a look at the following eligibility requirements for student loan refinancing to determine if you qualify.
- Have good credit – At a minimum, borrowers will need a credit score of 680 to qualify. In most cases, approved refinancers have FICO scores in the 700s.
- Have enough income to afford your expenses – Many lenders look at your debt-to-income ratio when determining qualification. The debt-to-income ratio required for student loan refinancing varies by lender.
- You attended an eligible school – Many refinance lenders require that borrowers attended a school that is authorized to receive federal aid dollars.
- Additional qualifications and exceptions may apply. Please contact our team if you are interested in learning more about your eligibility.
When You Shouldn’t Refinance Student Loans
There are various situations and reasons when it might not be a good idea to refinance your student loans. Keep the following in mind when considering refinancing your student loans.
- If it won’t lower your interest rate or save money: While it may seem obvious, refinancing may not be a good idea if it won’t lower your interest rate or help you meet specific financial goals such as lowering your monthly payment, paying off your loans faster, or saving money over your loan term.
- If you are pursuing Public Service Loan forgiveness or want Income-Driven Repayment and other federal benefits: Refinancing your student loans turns your federal student loans into private student loans, which aren’t eligible for benefits that apply to federal student loans.
- If you don’t qualify: There are specific credit score, debt-to-income ratio, and other various requirements in order to qualify for student loan refinancing. Additionally, if your credit score and other areas need work, you may not receive a desirable interest rate.
Reasons to Refinance Student Loans with ELFI
Some of the Lowest
We believe in rewarding financially responsible borrowers by providing some of the lowest student loan refinancing rates.
Expertise That’s Second
Our ELFI management team has over 30 years of expertise in student loans.
Secure your personalized loan options in just a few short minutes.
Student Loan Advisors
Our award-winning customer service team will guide you every step of the way.
Service Coast to Coast
We lend across the entire U.S. and Puerto Rico.
“Loved the personal loan advisor experience … When she called me and left me a voicemail, she sounded like a friend, not a scary loan robot, and it really put me at ease through the process.”
“The process was quick, but thorough to the point where I felt secure with all the checks Elfi was doing. Along with automatic emails, I had an employee reach out to me who was fully available during the process.”
“I compared payment options to several other companies, and Education Loan Finance by far had the best options. I was able to reduce my monthly payments and now I will be paying off my loans in 7 years, rather than 10. Five stars!”
“I wish I’d done this sooner! The refinance process was fairly straightforward and easy to manage, and having the added benefit of a loan advisor was super helpful. The rates are competitive and they have plenty of options for every person.”
“My loan advisor was very helpful and prompt in getting all of my documents together and assisting when I had questions … The customer service is top notch compared to similar companies I inquired with.”
“Their review process was SO much easier and more organized than another company I contacted about refinancing my student loan, and they offered the best interest rate compared to several others! I liked that I was personally assigned a loan coordinator who responded quickly to my emails and helped answer any questions I had.”
“Education Loan Finance’s Personal Loan Advisors helped ease the refinancing process significantly. They see you as an actual person with real-life situations, rather than just another number in the student loan refinancing process. I’m now saving over $18,000 on my student loan, and plan to use this money to save for graduate school and to pursue my dream job as an archaeologist.”
“After reviewing multiple companies I found that Education Loan Finance offered the best rate and monthly payment. I’m saving approximately $20,000 over the life of my loan and am planning on using those savings to pay off my loan faster! My personal loan advisor was responsive & urgent with his answers and the entire process (including approval) took about 24 hours.”
“Andrea was incredibly helpful! It was nice to have someone take the time to answer all of my questions, provide explanations and keep me apprised of next steps. Refinancing was a breeze…thanks ELFI and Andrea!”