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Knowledge Hub / A Guide to Refinancing Private Student Loans
A Guide to Refinancing Private Student Loans

A Guide to Refinancing Private Student Loans

Living with Student Loans
ELFI | November 9, 2022
A Guide to Refinancing Private Student Loans

Whether you reached the borrowing maximum on federal student loans or needed cash to cover additional class fees, you may have taken out private student loans to pay for college. While private loans can help you finish your degree, they sometimes come with high-interest rates. If you have high-interest student loans, student loan refinancing can be a smart decision.  Although there are drawbacks to refinancing federal student loans, there aren’t many disadvantages to refinancing private student loans. In fact, student loan refinancing could allow you to get a lower interest rate, smaller monthly payment, or a different repayment term.  When it comes to refinancing student loans, here’s everything you need to know.

Can You Refinance Private Student Loans?

If you borrow money to pay for college, your loans can be federal or private. Federal student loans are issued by the U.S. Department of Education. Private loans are issued by banks, credit unions, and specialty lenders.  Whether you took out private student loans to complete your bachelor’s degree or to help your child pay for college, you can refinance private student loans with most student loan refinancing lenders. Private undergraduate loans, graduate loans, and parent student loans are all eligible for refinancing.

Should You Refinance Your Private Student Loans?

If you aren’t sure if refinancing student loans is a good idea, weigh the pros and cons. There aren’t many drawbacks to private student loan refinancing as long as you get better student loan repayment terms or a better interest rate.

Benefits of Refinancing Private Student Loans

Drawbacks of Refinancing Private Student Loans

When Refinancing Private Student Loans Might Not Make Sense

While there aren’t many drawbacks to refinancing private student loans, it doesn’t always make sense to refinance your loans. For example, it may not be a good idea to refinance your debt in the following situations:

4 Simple Steps to Refinance Private Student Loans

Refinancing private student loans is a simple process, and lenders don’t typically charge origination or disbursement fees, so there isn’t a cost to refinance student loans. To refinance your loans, follow these four easy steps:

1. Make Sure You Are Eligible for Student Loan Refinancing

Eligibility requirements vary by lender. With ELFI, the following requirements to refinance student loans apply:

2. Prepare Your Financial Documents

When you apply, refinancing lenders will ask you for some basic information. Expect to provide the following documents:

3. Compare Rates With Multiple Lenders

Before refinancing your loans, it’s important to compare rates from multiple lenders. Interest rates, repayment terms, and eligibility requirements can vary between lenders, so shopping around can pay off.  When comparing student loan refinancing lenders, pay attention to the following characteristics:

4. Apply with Your Lender of Choice

After you have gotten quotes from multiple lenders, you can select the lender that is the best fit for you and complete the application process. When you apply, you’ll be asked to submit documentation and information about yourself, your income, and your loans. You’ll also have to consent to a hard credit inquiry so the lender can check your credit.  Once you submit the application, the lender will review the information and make a decision. If the lender approves you, they will send you a loan agreement that outlines the terms of the loan. You can sign the agreement and send it back to the lender if you agree with everything listed.  After that, the lender will work with the loan servicers behind your existing loans to pay off those accounts. Continue making all of the minimum payments until you receive confirmation that the old loans have been paid in full — otherwise, you risk incurring late fees. Don’t worry if you end up overpaying; any overpayments will be refunded to you.

Refinance Your Private Student Loans with ELFI

Now that you know the ins and out of refinancing private student loans, you can start the process and refinance your student loans with ELFI.* ELFI is a leading lender for student loan refinancing since it offers competitive variable and fixed interest rates and multiple repayment term options. Plus, ELFI doesn’t charge application fees, origination fees, or prepayment penalties.  To find out how much you can save by refinancing your loans with ELFI, use the student loan refinance calculator.