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How Refinancing Student Loans With ELFI Works

We know that financing an education is a reality most students face. That’s why we work hard to make the student loan refinancing process simple and convenient, so you can focus on what matters most – your bright future.

Pre-qualification does not affect your credit score.



See personalized savings on your student loans in minutes.



Explore options and select a plan with the best rates and terms to fit your refinancing needs.



Upload screenshots or smartphone photos of your documents. Then sign your paperwork electronically!

Low Student Loan Refinancing Rates & Flexible Terms

ELFI has flexible options for student loan refinancing and parent loan refinancing to fit your specific goals and budget.

Loan Amounts From


Rates From


2.39% APR*


2.79% APR*

Terms From

Student Loan Refinancing

5 – 20 years*

Parent Loan Refinancing

5 – 10 years*

* The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate 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. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.10 per $1,000 borrowed. To qualify for refinancing or student loan consolidation through Education Loan Finance, you must have at least $15,000 in qualified student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.

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Our customers have reported that they are saving an average of $272 every month and should see an average of $13,940 in total savings after refinancing their student loans with Education Loan Finance.1

1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 2/7/2020 and 2/21/2020. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.

Learn How Much You Could Save

Refinancing your student loans could help you save money on your monthly payments or over the life of your loan. Use our Student Loan Refinancing Calculator to get an estimate for what you could save by refinancing your student loans with ELFI.

Why Refinance with ELFI?

Some of the Lowest
Rates Available

We believe in rewarding financially responsible borrowers by providing some of the lowest refinancing rates available.

First place ribbon icon
Expertise That’s Second
to None

Our ELFI management team has over 30 years of expertise in student loans and student loan refinancing.

Fast and
Easy Process

Secure your personalized student loan or refinancing options in just a few short minutes.

Personal Loan Advisors

You'll be assigned a single Personal Loan Advisor from our award-winning customer service team to guide you every step of the way.

No Unnecessary Fees

With ELFI, you won’t pay any application fees, origination fees, or have prepayment penalties. See the other benefits of student loan refinancing with ELFI.

Service Coast to Coast

ELFI private student loans and student loan refinancing are available across the entire U.S. and Puerto Rico.

What Our Customers Are Saying

Commonly Asked Questions about Student Loan Refinancing

If you're considering refinancing your student loans, you likely have questions. Here are some of the most frequently asked questions we hear from customers.

When should I refinance student loans?

Deciding the right time to refinance student loans depends on your current goals and financial situation. If you have a good credit score, stable income, and would like to save money by lowering your interest rate, pay off your loans fast by shortening your repayment term, or extend your repayment term to make repayment more manageable, now may be the time to refinance. Learn more about when to refinance student loans.

What do I need to qualify for student loan refinancing?

In order to qualify for student loan refinancing with ELFI, you must meet the following criteria, among other factors:

  • Must be a U.S. citizen or permanent resident alien without conditions and with proper evidence of eligibility.
  • Must be at the age of majority or older at the time of loan application.
  • Must have a minimum loan amount of $15,000.
  • Must have earned a Bachelor’s degree or higher.
  • Must have a minimum income of $35,000.
  • Must have a minimum credit score of 680.
  • Must have a minimum credit history of 36 months.
  • Must have received a degree from an approved post-secondary institution and program of study.

Learn more about ELFI’s student loan refinancing eligibility requirements.

What is the difference between student loan refinancing and student loan consolidation?

Student loan consolidation is the process of combining multiple loans into one loan. The federal government offers the Federal Loan Consolidation program to borrowers of federal student loans, and only federal loans are eligible for the program (private student loans are not). Through the federal student loan consolidation, your loans are combined and the interest rate is the average of your loans rounded up to the nearest 1/8 percent.


Similar to consolidation, refinancing student loans involves combining multiple student loans into one loan with one monthly payment. However, unlike Direct Loan Consolidation, this option is only offered by private lenders and includes the consolidation of both federal and private student loans. Student loan refinancing can reward borrowers who demonstrate responsible financial habits with rates and payment options not offered through the federal consolidation program. New interest rates are calculated based on the borrower’s credit history and overall financial health, as well as current financial market conditions, rather than the weighted average of the included loans.

Learn more about student loan consolidation vs refinancing.

What types of loans are eligible for refinancing?

In short, all types of student loans are eligible for student loan refinancing. Federal student loans and private student loans can be combined when refinancing, or you can choose specific federal or private student loans to refinance. The choice is yours to make based on what will best benefit you.

Is now a good time to refinance?

The CARES Act passed in March of 2020 provided several benefits to borrowers of federal student loans, and the recent executive order signed by the Trump administration extended many of these benefits through the December 31, 2020. These benefits include:

  • Federal loan payments suspended
  • Interest rates reduced to 0%
  • Non-payments for those pursuing Public Service Loan Forgiveness and loan rehabilitation count as qualifying payments
  • Collection activities postponed

It’s important to consider your federal student loan protections before refinancing federal student loans. Learn more about the CARES Act student loan protections from the U.S. Department of Education.

However, while federal student loans are under protection, private student loans are not. Student loan refinancing rates are currently at historical lows, making now an opportune time to refinance private student loans or a combination of private and federal student loans.

Learn More About Student Loan Refinancing

woman wondering if it's time to refinance student loans
When To Refinance Student Loans: 9 Signs It’s Time

Updated August 24, 2020
When is it the right time to refinance your student loans? This can be a tough question to answer because everyone’s situation is unique. There are certain situations in which refinancing student loans is a good idea and certain situations in which refinancing is a bad idea. In this blog, we’ll explain the factors that can help you determine whether now is the time to refinance student loans, along with a few signs that it isn’t the right time.  

When To Refinance Student Loans

Refinancing student loans may be a good option if you meet certain criteria listed below. Factors to consider include your credit score and credit history, your current loan status, your employment status, your debt-to-income ratio, your current interest rates, among others. Here are nine signs that now may be a good time to refinance your student loan debt.  

You have a good credit score and credit history

Your credit score is an important factor in determining whether you should refinance student loans. Having a
good credit score makes you a prime candidate for refinancing because it will allow you to receive more favorable interest rates when you refinance, allowing you to save more money over the life of your loan.    Additionally, having a well-established credit history is another good indicator to lenders that you are a responsible borrower, which will also help you receive a better interest rate. Many lenders require a minimum FICO score of 650 to 680 in order to qualify.   

You’re up to date on your loan payments

If you’ve been consistent about making your student loan payments on time every month, you are more likely to be a prime candidate for refinancing student loans.    Having a strong payment history shows lenders that you are a responsible borrower who will make your loan payments, which will also help lower your interest rate. Having made between 90-97% of payments on time is considered average, but a payment history with 98-100% of payments made on time is ideal and makes you a prime refinancing candidate.  

You are employed with a steady income

When you apply for refinancing, your lender will require you to report your income. Having secure employment with a steady income also makes you a good candidate for refinancing student loans. Lenders prefer borrowers who can comfortably make their loan payments, even in the case of a financial emergency.    Finding a job with a higher salary may help you qualify for a better interest rate, even if you have already refinanced your student loans in the past. See how often you can refinance your student loans for more information.   

You have a good debt-income ratio

A term commonly used by lenders, the debt-to-income ratio is also a key factor in showing borrowers your ability to take on debt. Your debt-to-income ratio, also known as DTI, is a number that shows how your total monthly debt compares to your gross monthly income.    Most lenders require a DTI below 65%, with many requiring a ratio below 55%, with different requirements based on your income, degree type, and loan amount. If your debt-to-income ratio is in the 50% range or lower, you are likely a great candidate for student loan refinancing and may be able to secure a lower interest rate in the process.    

You know which student loans to refinance and why

When entering the refinancing process, it’s important to know which of your loans you want to refinance and why. Different student loans have their pros and cons, varying from borrower benefits to their interest rates.    For example, federal student loans offer certain borrower protections, as well as Income-Driven Repayment (IDR) plans. For some borrowers, refinancing private student loans that have high interest rates without borrower protections makes the most sense, while other borrowers may decide to refinance their federal student loans as well due to having a large amount of debt and wanting to save over their loan term.    If you’re not sure which loans you want to refinance, check out our guide to student loan refinancing to help make these decisions.   

Your grace period is ending

Some student loans, such as federal student loans, typically have a grace period following graduation to allow borrowers to get on their feet before making payments. Federal student loans offer a six-month grace period. Once this period is over, payments will begin.    Refinancing your student loans may be a good idea once your grace period is coming to an end. However, keep in mind that some lenders will honor your previous loan’s grace period when refinancing.   

You will save money on interest or loan terms

One of the primary benefits of refinancing student loans is the ability it gives you to potentially save money on interest or shorten your loan term. A few scenarios in which refinancing could save your money on interest include if your current loans are high-interest, or if your current loan term is fairly long.    Take some time to examine your current interest rates compared to rates offered by student loan refinancing lenders – saving just 1-2% over the life of your loan could result in thousands of dollars saved. Shortening your loan term also typically goes hand-in-hand with a lower interest rate. We recommend using our student loan refinancing calculator to calculate your potential savings to help determine if refinancing is worth it.   

You have high variable interest rates

While most variable student loan interest rates are currently low, there is potential for interest rate increases in the future. If your student loan is currently a variable-rate loan, you may want to consider refinancing should your interest rate increase.    Switching to a fixed rate also offers the benefit of locking in a lower rate without the risk of it increasing over time. Learn about fixed vs. variable rate student loans and determine which is best for you when refinancing.   

You know how to find a good lender

Before refinancing your student loans, you need to know the qualities of a good student loan refinancing lender.    A few things to look for include a lender that offers personalized customer service and can help you navigate the student loan refinancing process, low competitive interest rates, the opportunity to prequalify to see your rate without affecting your credit score, and borrower protections in the case of financial hardships.  

When should you not refinance student loans?

In some cases, student loan refinancing may not be for you. It’s important to note that some of these factors are temporary and may allow you to refinance later on, while other factors are more permanent.    Here are the factors that may indicate that now is not the right time to refinance your student loans.  

If you have bad credit

If you have a less than optimal credit score, now is probably not the time to try to refinance student loans. As stated earlier, lenders are typically looking for credit scores in the mid-600s at a minimum, while many borrowers who are approved have FICO scores in the 700s. Having a lower credit score when refinancing may force you into adding a cosigner in order to qualify, which may negatively impact them if you are not able to keep up with your loan payments. Look into ways to improve your credit score if this applies to you.  

You’re struggling with student loan payments or defaulted

If you’ve had some difficulty making your student loan payments on time in the past or have defaulted on your student loans, now may not be the best time to refinance. Missed payments negatively impact your credit history, which is a key factor in qualifying for student loan refinancing.    By reestablishing a history of on-time payments, you can improve your credit score along with your credit history, which could qualify you to refinance down the road.  

You’ve declared bankruptcy

Filing for bankruptcy negatively impacts your ability to refinance student loans. Most lenders will require borrowers to wait a specific amount of time following bankruptcy before qualifying to refinance. If you’ve declared bankruptcy within the past 4-10 years, now may not be the right time to refinance your student loans.  

If you are pursuing Public Service Loan forgiveness or want Income-Driven Repayment

If you’re in public service and know you’ll qualify for Public Service Loan Forgiveness after making ten years of qualifying payments, refinancing student loans may not be for you because it will disqualify you from the program – however, be sure to verify that you qualify for loan forgiveness. Check out this student loan forgiveness guide for more information.    Additionally, refinancing with a private lender will not allow you to participate in the Income-Driven Repayment plans offered with federal student loans. If you prefer to have these student loan repayment methods, now may not be the time to refinance.  

If it won’t lower your interest rate or will extend your loan term

While it may seem obvious, refinancing may not be a good idea if it will increase your interest rate or cost you more by extending your loan term. If you attempt to prequalify for refinancing and the rate you are given is higher than your current one, or if you only have a few years left on your loan term and refinancing will extend it, you may want to forego refinancing.  

Is Student Loan Refinancing Right For You?

Student loan refinancing can offer many benefits if done in the right circumstances. It’s important to assess your situation in detail and do your research before making a decision.   If you have questions about student loan refinancing or need assistance in making a decision, reach out to Education Loan Finance. Our Personal Loan Advisors are experts in student loan refinancing and can address your questions, provide the guidance you need, and help you make the decision that is in your best interest. If you’re ready to refinance your student loans, learn more about student loan refinancing with ELFI and prequalify to see your rate in minutes without affecting your credit score.   

What To Know Before Refinancing Student Loans

    *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.  
  *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
clocks representing how often to refinance student loans
How Often Can You Refinance Student Loans?

Updated October 22, 2020
  Refinancing your student loans is a great way to consolidate your loans into one simple payment and bring your interest rate down. What if, however, you refinance your student loans and then interest rates drop again? If you've already refinanced, can you refinance more than once?    In today's blog, we're excited to teach you about the many benefits of student loan refinancing, as well as when refinancing might be right for you. Even if you've already been through the process once, understanding the factors that impact the rates you're offered is a great way to lower your rates even further. Taking the right steps to prepare before refinancing could mean extra savings and more financial flexibility.  

What is Student Loan Refinancing?

Student loan refinancing means a lender pays off your current loan with a new loan you borrow. You can refinance with your current loan provider or refinance student loans with a new company.   It's also possible to refinance multiple loans into a single payment through student loan consolidation. Consolidating your student loans with a new lender is a great way to streamline the repayment process, especially if you're keeping track of multiple lenders and deadlines. You can even consolidate both federal and private loans.   That said, some borrowers are confused by the differences in student loan consolidation vs refinancing. Although you can choose to consolidate your student loans when you refinance, you do have the option to refinance specific loans without consolidating all your payments. For example, you can choose to refinance only your private loans if you're taking advantage of a federal loan benefit like an income-driven repayment plan.   So when should you look into refinancing? As soon as possible, depending on some factors discussed below. Interest rates change with the market, and the longer you wait, the more savings you could be missing out on. You can refinance student loans as often as you find it beneficial, as long as your financial situation qualifies you for refinancing.     >> Related: LIBOR: What It Means For Student Loans  

How Many Times Can You Refinance Student Loans?

Although you can refinance multiple times, before searching for a new lender, take a moment to consider whether refinancing again will help accomplish your financial goals. If you notice lenders are offering low rates and your credit score is strong, now could be the perfect time to refinance again. Additionally, if you want to accomplish a more immediate financial goal like buying a house or launching your own business, then refinancing may enable you to select a longer student loan repayment term.   On the other hand, if your credit score could use some improvement, you may want to wait until you can optimize your chances of receiving the best possible interest rate before refinancing again. Also, if you notice interest rates have gone up, then it may be wise to hold off on refinancing for the time being. Knowing when and when not to refinance your student loans again is a great way to ensure you're making a choice that will benefit your long-term financial goals.  

How Often Should You Refinance Student Loans?

You can refinance student loans multiple times. Before refinancing again, however, be sure to consider whether the time is right for you. If you refinance your student loans more than once, you will be impacting your credit score, so make sure only to do so if you will be saving a significant amount of money. While many lenders will do a soft credit check to determine the appropriate rate estimate, moving forward with the refinancing process does require a hard credit check.   Fortunately, credit checks have small and short-term impacts on your overall credit score. If your score is in good shape and refinancing will help further your long-term goals, then it's likely worth the temporary dent. If you need a little more time to boost your credit, however, then take the time you need to adequately prepare. Refinancing with a strong credit score will increase your chances of receiving a better rate, so your efforts will be rewarded.   Here are some instances when you should consider refinancing your student loans again: 
  1. When you find a lower interest rate on student loans - Interest rates rise and fall with the market. If you initially refinanced when student loan rates were higher, check again when rates drop. It may be months or even a couple of years, but a lower interest rate is sure to save you money on your monthly payment.
  2. If your credit score has improved to qualify you for a lower rate - Did you clean up your credit and raise your score from when you initially refinanced? Having a higher credit score could make you eligible for a better interest rate.
  3. When your income has increased - Having a higher income can help reduce your debt-to-income ratio, thereby making lenders more willing to offer you a lower interest rate.
  4. If you have a variable interest rate and need steady payments - Refinancing student loans again to a fixed rate could provide ease of mind that your payment can’t go up because your interest rate goes up.

Factors to Consider Before Refinancing Student Loans Again

To maximize your refinancing success, take the time to adequately prepare before signing on the dotted line. By learning about the factors that impact your rate estimate, you'll have the tools you need to earn the best possible rate on your loans.  

Check Your Credit

Some lenders require a credit score in the 600s to refinance your student loans. To earn the best possible interest rates, however, you should aim for a credit score in the 700s or higher. Individuals with higher credit scores qualify for lower interest rates, so improving your credit gives you the best possible chance of decreasing your interest rate. To check your credit score for free, visit AnnualCreditReport.com.   Your credit score is based on several factors, the most important of which is payment history. Making on-time payments on your student loans, credit cards and other regular bills will help keep your score high, or raise it if it needs a boost. Additionally, paying down debt is another effective way to raise your credit score. For more information about improving your credit score, check out our guide for tips on building good credit.  

Consider Your Financial Situation

To achieve the best possible interest rate, you must also prove that your income is high enough to cover your loan payments and any other debt. This means lenders will calculate your debt-to-income ratio. Your debt-to-income ratio is obtained by dividing the total of your monthly loan payments by your monthly income. For example, if your monthly student loan payment is $500, your car payment is $400, and you earn $3,000 per month, your total monthly debt payments are $900. Your debt-to-income ratio would be $900/$3000 = 30%. Generally, a debt-to-income ratio of 50% or less is needed to refinance.     As your income increases and your debt decreases, your debt-to-income ratio will improve. If you're earning more now than you were when you last refinanced your student loans, you may be eligible for lower interest rates. If your income is similar to the last time you refinanced, consider paying down higher-interest debt, like credit card debt, to boost this metric.   

Loan Terms and Fees

Before refinancing, be sure you know your current loan term and interest rate. If you're looking to pay off debt more quickly, a short repayment term may be the best fit for you. If you're working toward other financial goals and need more financial flexibility, then you may choose to opt for a long repayment term. You can also choose between a fixed or variable interest rate to find the best fit for you.   Here’s how choosing the right student loan repayment term can impact your monthly payment:    A private student loan of $20,000 with an interest rate of 8% for ten years will require you to pay $243 per month. Refinance the loan to a ten-year loan with a 3.99% interest rate, and you could be saving $40 per month and $4,831 over the life of the loan.     Whether you’re looking for a variable or fixed rate or a shorter or longer-term payment plan, a good refinancing company will offer different refinancing options to suit your situation. Should you choose to refinance student loans with ELFI, you can choose from repayment terms of 5,7,10, 15, or even 20 years.*   It's also important to be aware of any fees you'll incur when refinancing, like origination and prepayment fees. Some lenders charge origination fees as part of the cost of processing your loan application. If your lender charges prepayment fees, it means you'll pay a penalty for making all or part of your loan payment early.   While these fees may seem inconsequential at first, they can become a hassle for borrowers who want to pay down their student loans as quickly as possible. With ELFI, you won’t pay an application fee, origination fee, or a penalty fee for prepayment*. Your focus and hard-earned money should go to paying off your student loan debt, not fees.    If you are interested in learning how much you could save by refinancing with ELFI, check out our student loan refinancing calculator.*

Switching Loan Servicers

Be wary of companies that are new to the industry and have little information available outside of their own website. As the student loan refinancing industry grows, it can also become a target for phishing attempts and scams. It's important to safeguard your personal information and only to share your financial details with a legitimate, reputable lender. ELFI has earned an “excellent” rating by review site Trustpilot and been awarded NerdWallet’s BEST Refi for Customer Service award for 2019. As you refinance, you may have questions or concerns come up that no chatbot can help with. Be sure the company you refinance with has a good support team who can advise you through the process. At ELFI, you would be connected to a Personal Loan Advisor who will guide you through every step of the way.   >> Related: What’s So Great About an ELFI Personal Loan Advisor?  

Adding or Releasing a Cosigner

If you're having difficulty meeting the requirements to refinance your student loans, you may want to consider adding a co-signer. By choosing a co-signer with a high credit score and a low debt-to-income ratio, you may improve your chances of being approved for student loan refinancing. Alternatively, if your financial situation has improved and you'd like to remove a cosigner from your loan, refinancing often provides the opportunity for cosigner release.  

Bottom Line

Refinancing student loans can be a great option to save money on your monthly payment and interest costs over the life of the loan. Because you can refinance more than once, refinancing your student loans multiple times can be a great way to lower your interest rate further or change your repayment term.   Before committing to a new lender, however, do your research to be sure you'll receive the financial benefits that make refinancing worth your time and effort. Understanding your credit score and debt-to-income ratio, as well as watching out for unnecessary fees, will help you to choose the right loan servicer. Knowing when to refinance student loans is one of the best ways to continue working toward your financial goals.
What Is Student Loan Refinancing And How Does It Work?

Updated August 25, 2020
  If you’re an adult with student loan debt, you may have heard of a process called
student loan refinancing. In this post, we’ll walk you through everything you need to know about refinancing student loans, such as what student loan refinancing is, how to refinance student loans, how to compare lenders and rates, the eligibility requirements to refinance, how you can tell whether now is the time to refinance, and more.  

What Is Student Loan Refinancing?

Student loan refinancing is the process of obtaining a new loan with a private lender. That new loan pays off your old loan and typically sets you up with a new loan servicer, new interest rate, and new repayment term. People usually refinance their student loans with the goal of lowering their interest rate, lowering their monthly payment, or shortening their repayment term to pay off their loans faster.    The interest rates and terms available vary by lender, and the rates you are provided typically depend on your personal financial situation, including factors such as your credit score, credit history, and debt-to-income ratio. It’s normally best to refinance when you have the opportunity to lower your interest rate, make repayment more manageable, or save money over your loan term.   For example, maybe you have a mix of private and federal student loans that are higher interest than what you can currently get with a private lender. So if you have $25,000 in loans and you’re paying anything from 5% to 8.75% interest, if you can get them refinanced at 4%, then you can save a lot of money in interest over the life of your loans. Watch this video for a breakdown of how student loan refinancing works.  


How to Refinance Student Loans

When preparing to refinance student loans, you may wonder how long the process takes, or how many steps are involved. Here are the main steps in the refinancing process, so you can know what to expect from the start:  

Compare Lenders & Rates

The first step in your journey to refinance your student loans should always be to shop around for the best lenders and interest rates. If you’re not going to save money (either your monthly payment or the amount you’ll pay over your loan term) then it usually doesn’t make sense to refinance. That’s why most people look first to interest rates to understand whether they should refinance or not. If you qualify for significantly lower interest rates than what you currently pay, then take a look at how much you’ll save and see if it makes sense to move forward. An online student loan refinancing calculator can give you an idea of how much you could save by refinancing.
  It’s also important to compare lenders when refinancing. When you check what rates you qualify for with a lender through a process called prequalification, they will generally require a soft credit check. However, this is nothing to worry about, as soft credit checks will not impact your credit score. Also worth noting is if you would prefer a fixed or variable interest rate. If interest rates are currently low, then a fixed interest rate may be your best option. These are generally best for borrowers, but if interest rates may go lower and stay lower, a variable interest rate could be a good option.   In the case that multiple lenders offer you similar rates and terms that can save you money, it’s also important to compare lender benefits and their reputations. Look into student loan refinancing reviews of each lender you’re considering. Additional factors could include the lender’s customer service and forbearance options in the case of an emergency. A lender with great customer service could be very helpful during your first time refinancing.

Consider Loan Terms & Payment Options

Briefly mentioned above, another factor for student loan refinancing can be the terms of your loans or the amount of time that you’ll continue to pay these loans before they are paid off. When you refinance, you can typically choose loan terms of 5, 7, 10, 15, or 20 years, but these terms can vary by lender. Shorter loan terms typically come with lower interest rates, and the rate rises with the length of the repayment term.   By choosing a shorter student loan repayment term, you will likely receive a lower rate than a longer term loan, saving you in interest over time and allowing you to pay off your student loans faster. However, depending on how much your interest rate is reduced, your monthly payment may be the same or higher. The main benefit of a shorter repayment term is saving in interest and paying off your loans faster.   By switching to a longer repayment term, you can lower your monthly payment to make repayment more manageable. Depending on how much your interest rate is reduced, you may still save money in interest over the life of your loan term. A third option is to choose the same repayment term, in which case you will save money in interest if you acquire a lower rate, and your monthly payment will also be lower.

Choose a Lender and Apply

After you’ve weighed the options above, it’s time to choose your lender and apply. Several documents are required for applying for student loans, and they will likely be some combination of the following:
  • Loan verification statements
  • Proof of employment (in the form of a W-2, pay stub, or tax returns)
  • Proof of residency
  • Proof of graduation
  • Government-issued ID
When you submit your student loan application completely, it’s important to remember that this will likely incur a hard credit check which could affect your credit score by several points. Only fully submit your application when you’re completely ready.

Sign the Refinancing Agreement & Pay Off Your Student Loans

It will likely take some time before your application is approved, and while you are waiting you should continue to pay off your student loans. Once you are approved, your lender will pay off your original loans, and from then on, you will make your loan payments to them or their associated servicer. If you’re having second thoughts, you have several days, known as the rescission period, to cancel your refinanced loan. 

Student Loan Refinancing Approval Criteria

There are a number of student loan refinancing requirements that play a role in whether or not you are approved for student loan refinancing, such as your credit score, credit history, and debt-to-income ratio.  Possibly the most important requirement is your credit score. Traditionally a “good” credit score is about 680 or higher. Most lenders won’t qualify you for refinancing if your credit score is below 660, but that’s not always the case. The better your credit score, the better rates you’ll receive from lenders. Additionally, your credit history plays a role in your ability to refinance. If your credit score isn’t above the minimum, another option you have is refinancing with a consigner who meets the eligibility requirements. However, it’s important to remember that your consigner will also be responsible for the loan.  

Best Ways to Refinance Student Loans

The benefits of refinancing student loans differ by loan type, and there are several factors to consider before moving forward with refinancing.   

Private Loans

When considering refinancing private loans, it usually comes down to the math of how much you’ll save. Because there are so many private student loan options, you should compare your specific interest rate, terms, and borrower benefits offered by your lender before refinancing private student loans. Unlike in the case of refinancing federal student loans, you probably aren’t losing any benefits or borrower protections by moving from one servicer to another. Calculate how much you’ll save by refinancing in order to help make this decision.  

Federal Loans

Federal student loans can also be refinanced with a private lender. These are some of the most common loans to refinance because many people can receive better interest rates than they received when they originally took out their loans. Refinancing federal student loans also allows borrowers to shorten their repayment terms to save additional interest costs and pay off their loans faster.   One reason to think twice about refinancing federal student loans is that when doing so, you lose access to certain benefits that the federal loan program offers. These benefits include the options of Income-Driven Repayment plans and the option of Public Service Loan Forgiveness (PSLF).   You can also refinance other kinds of student loans like Parent PLUS loans. Parent PLUS loan refinancing can be done by the parent who holds them or can be transferred to the student/child from whom the money was borrowed, so either can refinance them.   Keep in mind that you don’t have to refinance all loans of either type. You might have one or two private or federal loans that are at a higher rate and you want to refinance those, but you keep others as-is because the rates and servicers still fit your needs. The loans you choose to refinance are up to you.  

Student Loan Refinancing Alternatives

While student loan refinancing offers many benefits, there are alternatives for individuals who have a variety of needs. Here is a list of refinancing alternatives:
  • Income-Driven Repayment Plans – These repayment plans offered by the federal government allow borrowers to adjust their repayment terms and monthly payments based on their income and family size. The federal government offers fours types of income-driven repayment plans for different needs.
  • Deferment – Another option provided by the federal government, deferment allows you to delay making payments on your student loans for a period of time. Beware, however, that interest may still accrue.
  • Forbearance – Forbearance allows you to either forgo making payments on your student loans or pay them at your leisure for a period of time. During this time, interest is not accrued. Forbearance is typically offered in the event of economic hardship.
  • Consolidation – Consolidating your student loans simply means combining several loans from different servicers into one loan. The interest rate you get from consolidating is based on an average of your combined loans, or a weighted average. Through the federal consolidation program, your loans will be rounded up to the nearest 1/8th percent. Learn about student loan consolidation vs. refinancing.

When is it time to refinance your student loans?

Deciding when to refinance student loans at the perfect time is different for everyone. The decision is largely personal. Your best bet is to have a firm grasp on where you are financially and how you will benefit from refinancing. For instance, if you plan on taking advantage of federal student loan programs, or your credit score and history aren’t in the best shape, refinancing may not be right for you. However, for many, refinancing can save significant money on interest and on loan payments over time, due to lower interest rates, shorter loan terms, and lower payments. Alternatively, refinancing can serve to alleviate some financial stress by lengthening your repayment term and thus lowering your monthly payments. If you’re interested in refinancing, you can prequalify with ELFI in minutes to see your rate, without affecting your credit score. If you have questions, contact us to speak with one of our Personal Loan Advisors.  
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