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Student Loans Refinancing Guide

 

You may be one of the 40 millions of people in the country with student loans debts who find they’re a heavy burden. Burden or not, you can probably save a good amount of money by refinancing your student loans. We created this short guide to help you decide if refinancing your student loans is a good idea and if so, how to go about it.

 

 

 

Consolidate vs refinance

 
Consolidating your student loans let you combine a few Federal student loans into one Consolidating Loan (which is still a Federal loan). The big benefit of the Federal Consolidating Loan is you remain eligible to all Federal loan forgiveness, deferment, and income-based repayment plans. Another smaller benefit is you can do this yourself online without any fee at Studentloans.gov

 

The rate on your Consolidation Loan will be a weighted average of all the loans you want to consolidate.

 

Refinancing means you combine a few loans (which could be Federal, State or private loan) in only 1 new private loan. You can also refinance only 1 loan (instead of many, or if you prefer to only refinance 1 of your loans). The lender refinancing your loan(s) will pay your existing loan(s) and you’ll only have to pay back the new student loan they issue you.

The interest rate for your refinance loans varies for each lender. That’s why shopping for a low rate is important.

 

 

Why refinance?

 

  • Save money: when you refinance at a lower rate you’ll save money each months, which can then add up to a big sum each year.
  • Simply your life: by making only 1 payment each month if you refinance a few loans into only one instead of multiple payments each month. This will simplify your life even more if your loans are at different servicing companies.
  • You can’t use loan forgiveness: you’re not eligible for one of the loan forgiveness programs.
  • Don’t need income-based repayment: You’re job is sable, you have a sufficient cushion saved for emergencies so you won’t need other federal loan help programs like income based repayment.
  • You can add a co-signer to get a lower rate.

 

 

When not refinance?

 

  • You don’t meet the eligibility requirements: Your credit score is too low and/or you don’t have enough income to repay.
  • You started but haven’t graduated: Refinancing will be more difficult as less lenders let you refinance if you didn’t finish your degree.
  • You’re in an income-based repayment plan: If you refinance you won’t be eligible to such plan and may pay more monthly. Only you can decide if it makes sense to get out of the plan and pay more each month.
  • You won’t be eligible to some loan forgiveness or forbearance from Federal programs. But most refinance lenders have similar programs; so look out for them
  • You decide the monthly or yearly savings aren’t worth it: this means after getting a few quotes, the refinance rates you got are not low enough.

 

 

Which student loans can be refinanced?

 
Private loan: All private student loans can be refinanced. Refinance if you can get a lower rate and savings are worth it.

 

Federal and States: All Federal and States loans can be refinanced into a private loan.

 

Uncompleted degree: Even if you didn’t complete your degree, you can refinance your loan(s) some lenders (but not all lenders refinance non-graduate).

 

 

Fixed vs variable rates, and terms

 
Your interest rate will depend mostly on your credit score. The better your score the lower your rate. If you have no credit or a bad one you may not be able to refinance your student loans unless you get a co-signer.

 

Refinancing your student loan allows you to choose between a variable rate (usually lower) or a fixed rate (usually higher).

The terms are usually 5 to 20 years. The term will affect your rate. Usually, a short term, for example, 5 years, will have a lower rate than a 20-year term.

This means a variable rate with 5 term years usually get you the lowest rate while a fixed rate on a 20 years term will give you a higher rate.

Focus on having a monthly payment you’re comfortable first and foremost. Going for the shortest term may not be realistic if it forces you to pay more than you can afford.

 

You can’t refinance because of your low credit and your monthly payments are too high?

 
You can make your Federal loan payments more affordable by using one of the few income-driven repayment plan. You won’t save on interests but you’ll repay your student loan debt over 20 to 25 years, and if you still have a balance left after that period it’ll be forgiven.

 

You can also look into going for a loan deferment or forbearance to stop your payments or reduce them temporarily. Federal loans offer those 2 options and good private loans lenders usually do too.

 

Questions to ask yourself before refinancing

 

  • How much can I afford to pay each month?
  • What interest can I get if I refinance?
  • May I need Federal loans repayment options in the future?
  • Is my credit good enough to have a good rate?
  • Do I have enough income to meet the refinancing requirements?
  • Can I get a co-signer if I need one?
  • What type of income base and deferment help the lender provide?

 

 

Banks’ Student Loans Refinance Rates November 2019

 

Traditional banks’ rates are usually higher than other lenders like credit unions and online lenders. They only offer loans to people with good or great credit plus you may need to open an account at the bank to obtain a refinance loan.

BTT, Bank of America, Chase, KeyBank, US Bank and TD Bank don’t offer student loan refinancing.

 

Banks Rates (APR) Terms (years) Credit Score Fixed/Variable Deferment/Forbearance
Citizen Bank 2.46% to 9.62% 5,10,15,20 680+ Both None
Discover 4.62% to 8.49% 5,10,15,20 640+ Fixed 1 year
PNC 4.36% to 6.59% 5,10,15,20 680+ Fixed 6 months
Wells Fargo 3.75% to 9.99% 5,10,15,20 720+ Both 6 months
1st Republic 1.95% to 4.45% 5,10,15,20 700+ Both None
 

 

Online Lenders Rates November 2019

Traditional banks’ rates are usually higher than other lenders like credit unions and online lenders. All Federal, States and private loans can be refinanced. Undergraduate and graduate loans too.

 

Lenders Rates (APR) Terms (years) Loans Types Fixed/Variable Deferment/Forbearance
Advantage Student Loans 3.74%-7.78% 10,15,20 All Fixed Yes
Brazos (texas only) 3.21% to 6.66% 5,7,10,15,20 All Fixed Yes
Credible Start at 2.45% 5,7,10,15,20 All Both No
CollegeAve 2.37% to 7.12% 5 to 20 All Both Case by case
Commonbond 2.47% to 8.15% 5,7,10,15,20 All Both 1 year
Earnest 2.41% to 6.99% 5 to 20 All Both Up to 3 years
EDvestinU 4.51% to 7.2% 5,10,15,20 All Both 1 year
ELFI 2.80 to 6.69% 5,10,15,20 All Both Case by case
LaurelRoad 2.43% to 6.65% 5,7,10,15,20 All Both 1 year
Lendkey 2.24% to 7.50% 5,7,10,15,20 All Both 6 months
Sofi 2.41% to 7.87% 5,7,10,15,20 All Both 1 year
MEFA Start at 3.76% 7,10,15 All Both No
RISLA 3.89% to 8.14% 5,10,15 All Fixed No
Purify (PenFed) 2.86% to 7.61% 5,10,15,20 All Both Case by case

 

 

November 2019 Student Refinance Rates by State and Credit Score

You can see below recent rates reported in your state and by credit scores. This gives you an idea of the rates you could get. Use this to have an idea only as they may have changed. We recommend you get 2-3 quotes to have a better idea of the refinance rate you can get and see how much you could save. You can get quotes with the lenders at the top of this page.

 

      Credit Score    
 State Excellent Good Average Bad Poor
  720 – 850 690 – 719 630 – 689 580 – 629 below 580
Nationally 4.0% 5.1% 6.4% 7.6% n/a
Banks 4.4% 5.4% 6.5% 7.9% n/a
Credit Unions 2.6% 4.3% 5.8% 7.1% 8.1%
Online lenders 2.7% 4.5% 5.3% 7.1% 9.0%
Alabama 3.2% 5.0% 6.3% 7.5% 9.4%
Alaska 3.2% 4.6% 6.2% 7.1% 9.3%
Arizona 2.8% 4.9% 6.2% 7.2% 8.6%
Arkansas 2.9% 5.0% 6.3% 7.2% 9.1%
California 2.4% 3.6% 4.4% 6.6% 8.4%
Colorado 2.7% 3.7% 4.6% 6.7% 7.7%
Connecticut 2.5% 3.7% 5.3% 6.5% n/a
Delaware 3.1% 4.2% 5.2% 6.3% 8.4%
DC 3.1% 4.4% 6.2% 7.1% 8.9%
Florida 3.1% 4.0% 6.2% 7.3% 9.0%
Georgia 3.7% 4.5% 5.7% 7.0% 9.1%
Hawaii 3.0% 4.5% 6.3% 7.4% 9.1%
Idaho 3.4% 4.3% 6.1% 7.2% 9.1%
Illinois 3.3% 4.0% 5.7% 7.0% 9.4%
Indiana 2.6% 4.0% 6.1% 7.4% 9.2%
Iowa 2.9% 4.1% 6.2% 7.6% 9.0%
Kansas 2.8% 5.9% 6.9% 7.7% 9.1%
Kentucky 3.0% 4.6% 6.3% 7.3% 9.1%
Louisiana 3.0% 4.1% 6.2% 7.5% 9.5%
Maryland 2.6% 4.1% 6.6% 7.4% 9.0%
Massachusetts 2.4% 4.2% 6.0% 7.3% 9.4%
Michigan 2.7% 4.0% 6.0% 7.2% 9.2%
Minnesota 2.7% 3.7% 6.2% 7.3% 9.1%
Mississippi 3.2% 4.2% 5.6% 7.3% 9.1%
Missouri 2.6% 4.1% 6.2% 7.4% 9.8%
Montana 3.1% 4.2% 5.1% 7.2% 9.1%
Nebraska 2.6% 4.1% 6.2% 7.5% 9.5%
Nevada 2.8% 4.1% 5.4% 7.4% 9.3%
New Hampshire 3.1% 4.1% 6.5% 7.8% 9.2%
New Jersey 2.6% 3.7% 4.5% 6.7% 9.5%
New Mexico 2.8% 3.6% 6.3% 7.6% 9.1%
New York 2.5% 3.5% 6.1% 7.5% 9.1%
North Carolina 3.1% 4.1% 6.2% 7.5% 9.1%
North Dakota 2.9% 3.7% 6.4% 7.8% 9.5%
Ohio 3.0% 4.1% 6.2% 7.1% 9.0%
Oklahoma 3.0% 4.4% 6.0% 7.3% 9.3%
Oregon 3.0% 4.0% 5.4% 7.1% 9.1%
Pennsylvania 2.6% 3.4% 5.1% 6.9% 9.0%
Rhode Island 3.0% 4.2% 6.2% 7.1% 9.0%
South Carolina 3.3% 4.2% 6.0% 7.2% 9.0%
South Dakota 2.9% 3.7% 4.7% 6.8% 9.1%
Tennessee 3.3% 4.5% 5.3% 6.8% 9.9%
Texas 2.6% 3.6% 5.7% 6.8% 9.4%
Utah 2.7% 4.1% 6.3% 7.9% 8.6%
Vermont 2.3% 4.1% 5.6% 7.2% 9.1%
Virginia 2.6% 3.7% 5.5% 7.3% 9.4%
Washington 2.7% 4.1% 5.4% 7.0% 9.2%
West Virginia 3.1% 4.5% 6.4% 7.5% 10.0%
Wisconsin 3.1% 4.0% 5.4% 7.2% 9.5%
Wyoming 2.8% 3.8% 5.5% 6.6% 9.1%
Source: MFP’s users survey of 10,495 users who shared their student loans refinance APR interest rate between October 1 to 31 2019.

 

 

Federal loans rates (past years)

Below are the rates on all past federal loans. You can use those rates as reference when you want to calculate your savings when you compare with the rates you can get if you refinance your student loans.

 

Undergraduate

 

The following undergraduate loans have the rates right below.

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Perkins Loans (always had 5% interest rate)
Disbursed date Rates
7/1/19–6/30/20 4.53%
7/1/18–6/30/19 5.05%
7/1/17–6/30/180 4.45%
7/1/16–6/30/17 3.76%
7/1/15–6/30/16 4.29%
7/1/14–6/30/15 4.66%
7/1/13–6/30/14 3.86%
7/1/11–6/30/13 3.4%
7/1/10–6/30/11 4.5%
7/1/09–6/30/10 5.6%
7/1/08–6/30/09 6.0%
7/1/06–6/30/08 6.8%

 

 

Graduate and Professional

The following graduate and professional loans have the rates right below (except 6.8% for 7/1/06–6/30/13)

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
Disbursed date Rates
7/1/19–6/30/20 6.08%
7/1/18–6/30/19 6.6%
7/1/17–6/30/180 6%
7/1/16–6/30/17 5.31%
7/1/15–6/30/16 5.84%
7/1/14–6/30/15 6.21%
7/1/13–6/30/14 5.41%
7/1/11–6/30/13 6.8%

 

 

Parents and Graduate or Professional

The following Parents, Graduate or Professional loans have the rates right below.

  • Direct PLUS Loans
  • Federal PLUS Loans (rate is 8.5% for 7/1/06–6/30/13
Disbursed date Rates
7/1/19–6/30/20 7.08%
7/1/18–6/30/19 7.6%
7/1/17–6/30/180 7%
7/1/16–6/30/17 6.31%
7/1/15–6/30/16 6.84%
7/1/14–6/30/15 7.21%
7/1/13–6/30/14 6.41%
7/1/6–6/30/13 7.9%
 

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