If you are struggling to repay your monthly student loan bill, you may be curious whether or not if student loan refinancing is a good option for you. While there are many considerations to make, and each student loan situation is different, gathering a list of the best student loan refinance companies may be your best place to start. Remember, rates change regularly, and it won’t be the only factor that goes into making your pick. This list of student loan refinance companies is based on customer service, convenience, reputation and features. Compare each to see which one may be able to help you pay your loans down faster.
Compare the 4 Best Student Loan Refinance Rates
|Lender||APR||Minimum Loan||Maximum Loan||Best for…|
|SoFi||3.46% – 7.36%||$5,00||No limit||Extra perks and support|
|Citizens Bank||2.15% – 9.02%||$10,000||$500,000||Large loan amounts|
|Lend Key||1.90% – 8.65%||$5,000||$300,000||Recent graduates|
|Earnest||1.81% – 9.95%||$5,000||$500,000||Flexible payment pans|
What is Student Loan Refinancing?
When you choose to take your private student loan balance and have it sold to another bank, that’s considered refinancing. It’s similar to when you refinance a mortgage or car loan; if approved, you can possibly save money on interest and pay your loan down faster. You need to qualify for the refinancing, much like getting a completely new loan. Your credit score and payment history are considered when determining if you qualify and what new rate you’ll get. Student loan refinancing is especially advantageous during times of a low prime rate, set by the Federal Reserve. With interest rates lower across the board, you might find the savings on a new private loan to be enough to pay your debt down early or set aside money for other needs. The student loan refinance rate is simply the amount of interest you’ll pay on your loan, usually calculated as an annual percentage rate.
Student Loan Refinancing vs Consolidation
If you make enough money to continue steady monthly repayments on your debt, refinancing will give you a lower rate. This decreases the total amount of interest you’ll pay over time, often making your loan cheaper and shorter. Consolidation, on the other hand, doesn’t always give you a lower rate. It lumps all your loans together, giving you one monthly payment to handle. Because this payment is often smaller than what you would pay in total on all your loans, it’s better for your short-term budget, but you’ll pay more interest and extend the life of the loan significantly. Use our student loan consolidation calculator to see if consolidation may be the right choice for you.
Refinancing vs Student Loan Forgiveness
Another popular option is student loan forgiveness. This program is available for federal student loans and only qualifies a certain segment of borrowers to have their debt reduced or wiped out completely. Those working in certain industries, such as government or health, may have the ability to have their debt forgiven after a certain number of years working in their field. These forgiveness programs don’t work for private loans, either, and are reserved only for federal student aid.
Refinancing vs Income-Driven Repayment
A different form of student loan forgiveness is income-driven repayment or IDR. This program uses a formula to determine which of four plans works best for your situation. They include:
- Pay as you earn plan (PAYE)
- Revised Pay as you earn plan (REPAYE)
- Income-based repayment plan (IBR)
- Income-contingent repayment plan (ICR)
Under the IDR Program, if approved, you will continue to make 20-25 years of qualified debt payments before the remainder will be forgiven. Unfortunately, you may have already paid off the debt under a comparable loan refinancing option, and forgiven debt under IDR may be taxable, leaving you with another kind of debt.
The 4 Best Student Loan Refinance Rates of 2019
SoFi – The best extra perks and support
With an emphasis on offering more than just refinancing, SoFi is considered one of the best for overall support and education. It provides access to live support seven days a week and free financial coaches to help with many aspects of money management, not just student loan payments. You can even get career coaching, too, free of charge as part of your loan agreement service benefits.
How much do they cost? SoFi charges no application or origination fees, and you’re free to prepay your loan with no penalty. The entire process happens from one online portal, so you won’t need to meet with a banker in person. Fixed or variable rates depend on the current economic climate; currently, they are competitive with fixed rates from 3.46% APR to 7.36% APR and variable from 1.81% APR to 7.36%, with a cap of 9.95%. Get access to the lower APR tiers with enrollment in SoFi’s automatic payment program.
Citizens Bank – The best for those with large loans
Offering a variety of loan terms, ranging from five to 20 years, Citizens Bank is one of the few on the market with loan amounts of up to $500,000 for graduates. While it does offer smaller amounts (as little as $10,000), those with massive amounts of debt will find them to be easy to work with. Their fixed rates are currently 3.45% – 9.02% APR and variable are 2.15% – 8.82% APR, with discounts given for certain behaviors, such as automatic repayments.
If you co-signed with a relative or spouse, which is common for those who may not have the best credit, Citizens Bank lets you apply to release the co-signer after 26 consecutive on-time payments. If you have a Social Security number, you’ll be eligible to apply, even if you are not a citizen. Associate’s degree holders or those without a degree can apply after making 12 qualifying payments on their loan.
Lend Key – The best for graduates
If you did finish college and love the feel of a credit union, Lend Key is a solid choice. Comprised of lenders who pool their money to invest in student loans, it is completely online with the features that many appreciate from their community bank. It also gives you a variety of repayment terms from five to 20 years and offers interest rates as low as 1.90% variable and 3.49% fixed with their AutoPay service. Because it handles federal and private loan refinancing, you can choose to bundle your loans into one lower payment, usually at a better APR, too.
Because Lend Key only offers its loan services to those with a degree, you won’t have any luck if you didn’t finish school. The good news is that they consider any associates, undergraduate, graduate or doctorate degree from a Title IV-eligible school as a qualification. Loans range from $5,000 to $300,000, depending on your degree.
Earnest – The best for flexible payment plans
Of all the companies fighting for your student loan refinancing business, Earnest sets itself apart in a few ways. First, its website is intuitive, offering to compare what you’ll save with them versus what the other companies offer. It allows you to pick your term length and monthly payment amount; if you decide you want to change or refinance down the road, that’s allowed, too. Earnest offers a limited employment protection service to help with payments if you lose your job, as well. All of this comes with no fees.
Another perk to Earnest is that it spells out exactly what it is looking for in a borrower. It doesn’t have straight income requirements, but it does share that you need a 650 credit score, adequate income, low credit card debt, and certain extra qualifications, such as having an increasing banking account balance. Its rates are competitive, starting at just 1.81% fixed.
The Final Word
If it’s been a while since you first took out your private student loans, you may be surprised to find that your original loan rates are out of sync with what new loans are offering today’s borrowers. Student loan refinancing is often a strategic way to lower what you pay each month or decrease the time spent making payments. With student loan debt considered an epidemic by some financial experts, there’s no better time to take control of your financial situation and investigate if the best student loan refinance rates on the market are much better than what you are paying now.