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How Much Does It Cost to Refinance Student Loans?

How Much Does It Cost to Refinance Student Loans?

Living with Student Loans
ELFI | May 17, 2022
How Much Does It Cost to Refinance Student Loans?

For borrowers with sky-high interest rates on their student loans, student loan refinancing can be an excellent way to save money and pay off student loan debt faster. In fact, a 2021 U.S. News survey found that just 30% of private student loan borrowers took advantage of student loan refinancing. 

Why such a small number? Many people don’t understand the benefits of refinancing student loans – or how simple the process can truly be. Student loan refinancing means choosing a new lender to pay off your remaining student loan debt, then taking out a new loan with that lender in exchange for an updated rate and repayment term. It can be a great option for borrowers who want to pay off student loans faster and potentially save money over the life of the loan. Plus, if you have multiple payments, you can use refinancing to consolidate your student loans into one monthly student loan payment.

While you may be interested in the idea of refinancing your debt, you may be worried about the cost of refinancing student loans. However, the cost may surprise you!  Top refinancing lenders like ELFI don’t charge application, origination, or disbursement fees, so there’s no cost to refinance your loans. You can refinance your debt, lock in a lower interest rate, and save thousands of dollars, all at no cost to you.  Rather than charging an upfront fee, refinancing lenders make money off the loan’s annual percentage rate (APR).

Even though you may get a lower annual percentage rate than you have now, the lender is still profitable because of the interest that accrues on the loan — a mutually beneficial arrangement for lenders and borrowers.

Be Mindful of hidden Student Loan Refinancing Fees

When it comes to student loan refinance costs, it’s important to know that there may be other fees associated with student loan refinancing beyond what you pay in interest:

When you’re choosing a student lender, carefully review their terms to discover the types of fees they charge. Selecting a reputable lender like ELFI that doesn’t charge application, origination or prepayment fees can help you to enjoy the full benefits of student loan refinancing.

What Is a Finance Charge?

Almost all student loans accrue interest over time, and the longer your repayment term, the more interest you’ll pay. A finance charge is the total interest you’ll pay on a loan if you make only the minimum payment for the full life of the loan. The benefit of choosing a lender like ELFI that doesn’t charge prepayment penalties is that you can lower this charge by making extra payments on your loan, or repaying your student loans early.

Student Loan Refinancing Perks and Benefits

As a college graduate, you likely have several different student loans. You may even have a mix of federal loans and private debt. By refinancing your loans, you can combine them into one to streamline your due dates and keep your payments on track. Additionally, if you’re looking to remove a cosigner from your student loans, you could refinance the student loan into your own name. This is a great way to enjoy all the perks of refinancing, plus offer debt freedom to the person that cosigned on your original loan. Refinancing can also help you save money over the course of your student loan repayment. Read on to learn more!

How Much Can Student Loan Refinancing Save You?

By refinancing your educational debt, you could earn a lower student loan interest rate and save money on your repayment. The overall savings from student loan refinancing can be significant. Education Loan Finance borrowers reported saving an average of $286 every month after refinancing.1 Or, they reported an average of $22,500 in total savings after refinancing their debt. You can use ELFI’s student loan refinancing calculator to estimate how much you can save by refinancing your loans.* Plus, when you refinance, you can choose a repayment term that works for your current goals. You can lower your monthly payments by refinancing your student loans to a longer term, and free up money every month to put toward other goals. With a longer term, though, keep in mind that you’ll pay more in accrued interest over time. Alternatively, you can select a shorter repayment term to save on interest costs over the life of the loan. Learn More: How Much Money Can Student Loan Refinancing Save Me?

Student Loan Refinancing Eligibility Requirements

Most lenders have specific eligibility requirements to refinance student loans. ELFI’s requirements include:

Will Applying for Student Loan Refinancing Hurt My Credit?

With student loan refinancing, you could get a lower interest rate, reduce your payments, and save a substantial amount of money. Best of all, lenders like ELFI allow you to prequalify to see how much you could save without impacting your credit. Prequalification requires a soft credit pull, which won’t hurt your credit. If you’re interested in viewing your potential savings, get a rate quote without affecting your credit score with ELFI’s Find My Rate tool.* Keep in mind that a hard credit pull may be required when you officially refinance your student loans, which will temporarily impact your score.

Should You Refinance Your Student Loans?

Considering refinancing your student loans? If your credit score recently increased, now could be a great time to refinance. Additionally, if your debt-to-income ratio has improved, it can better your chances of qualifying for a lower interest rate. If you recently paid off another debt or your earnings increased, student loan refinancing may be the right fit. Learn More: When Is Student Loan Refinancing a Good Idea?

How to Refinance Student Loans

Ready to refinance? Here’s how to get started:

  1. Compare student loan refinancing lenders to see what types of student loan refinancing perks and rates you may be eligible for.
  2. Think about the loan repayment term that may be the best fit for your lifestyle and financial needs.
  3. Choose the lender with the offerings that most closely match your goals.
  4. Work with the lender to refinance your student loans, then start the repayment process.

Learn More: How to Refinance Student Loans

Find Out if Student Loan Refinancing Is Right for You

Ready to refinance your student loans? Prequalify with ELFI to see how much you could save. Plus, when you refinance your student loans with ELFI, you’ll be paired with a personal loan advisor, a student loan refinancing expert who can support you throughout the process and answer any questions you may have.


The content on this website is for educational and informational purposes only and should not be construed as legal, financial or tax advice. Links to other websites or references to services or applications are provided as a convenience only. A link does not imply ELFI’s sponsorship or approval of any other site, service or application. ELFI does not control the content of these sites, services or applications. 1 Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 11/01/2021 and 12/15/2021. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors. *Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 04-01-2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. See Eligibility Requirements for more information. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.10 per $1,000 borrowed. Rates are subject to change.