Student loan refinancing can transform your financial future by securing lower interest rates and better repayment terms. With the average college graduate carrying over $30,000 in student debt, finding the right refinancing company could save you thousands of dollars over the life of your loans.
Refinancing involves replacing your existing federal or private student loans with a new loan from a private lender, ideally at a lower interest rate. This strategy works best when you have good credit, stable income, and current rates that are higher than what you might qualify for today.
The key lies in choosing the right lender. Interest rates, repayment flexibility, and borrower protections vary significantly between companies. This guide examines the top refinancing companies offering the most competitive rates and terms to help you make an informed decision.
What to Look for in a Student Loan Refinance Company
Interest Rates and APR
The annual percentage rate (APR) represents the true cost of your loan, including fees and interest. Most lenders offer both fixed and variable rate options. Fixed rates provide payment stability, while variable rates may start lower but can fluctuate with market conditions.
Eligibility Requirements
Lenders typically require a minimum credit score between 650-700, steady employment, and a debt-to-income ratio below 50%. Some companies allow co-signers to help borrowers qualify for better rates.
Repayment Terms
Look for flexible repayment periods ranging from 5 to 20 years. Shorter terms mean higher monthly payments but less interest paid overall. Longer terms reduce monthly payments but increase total interest costs.
Borrower Protections
While refinancing federal loans means losing federal protections like income-driven repayment and loan forgiveness programs, some private lenders offer their own hardship options, including temporary payment reductions or forbearance.
Top Student Loan Refinancing Companies
SoFi
SoFi stands out with competitive rates and comprehensive borrower benefits. Their variable rates start as low as 5.99% APR, while fixed rates begin around 6.49% APR. The company requires no origination fees and offers unemployment protection, allowing borrowers to pause payments if they lose their job.
SoFi provides additional member benefits including career coaching, financial planning services, and exclusive networking events. They also offer rate discounts for autopay enrollment and loyalty programs for existing customers.
Loan terms: 5, 7, 10, 15, or 20 years
Minimum loan amount: $5,000
Maximum loan amount: Up to 100% of school-certified costs
Earnest
Earnest uses a unique underwriting approach that considers factors beyond credit scores, such as savings patterns and earning potential. This can benefit borrowers with limited credit history but strong financial habits.
Variable rates start around 5.28% APR, with fixed rates beginning at 6.19% APR. Earnest allows borrowers to customize their monthly payments and due dates, providing unusual flexibility in loan management.
The company offers a precision pricing model where small improvements in your financial profile can lead to rate reductions. They also provide skip-a-payment options once per year after making 12 consecutive payments.
Loan terms: 5 to 20 years (customizable)
Minimum loan amount: $5,000
Maximum loan amount: Up to $500,000
CommonBond
CommonBond focuses on graduate degree holders and offers both fixed and variable rate options. Variable rates start at 5.89% APR, while fixed rates begin around 6.19% APR. The company provides a social impact component, funding education for students in developing countries for every loan funded.
Their MBA loan program specifically targets business school graduates with competitive rates and flexible terms. CommonBond also offers forbearance options and graduated repayment plans for borrowers facing financial difficulties.
Loan terms: 5, 7, 10, 15, or 20 years
Minimum loan amount: $5,000
Maximum loan amount: Up to $500,000
LendKey
LendKey operates as a platform connecting borrowers with community banks and credit unions. This model often results in competitive rates, with variable options starting around 5.05% APR and fixed rates beginning at 5.95% APR.
The company requires no application fees and offers rate discounts for autopay enrollment. LendKey’s partnership with local financial institutions can provide more personalized service and potentially better rates for borrowers in specific regions.
Loan terms: 5, 7, 10, 15, or 20 years
Minimum loan amount: $5,000
Maximum loan amount: Up to $300,000
Comparing Your Options
Rate Comparison
Among these top lenders, LendKey typically offers the lowest starting rates, followed closely by Earnest and SoFi. However, the rate you receive depends on your creditworthiness, income, and loan amount. Most borrowers should expect rates higher than the advertised minimums.
Term Flexibility
Earnest provides the most customization options, allowing borrowers to select exact payment amounts and due dates. SoFi and CommonBond offer standard term lengths, while LendKey provides competitive options through its network of partner lenders.
Additional Benefits
SoFi leads in member benefits, offering career services and financial planning beyond the loan itself. CommonBond’s social impact mission appeals to borrowers interested in contributing to educational access globally. Earnest’s precision pricing rewards good financial behavior with potential rate reductions.
Advantages and Disadvantages
Benefits of Refinancing
Lower monthly payments through reduced interest rates can free up cash for other financial goals. Simplified loan management consolidates multiple loans into a single payment. Better customer service from private lenders often exceeds federal loan servicer experiences.
Fixed-rate options provide payment predictability, while variable rates may offer initial savings. Some lenders provide co-signer release options after meeting specific payment and credit requirements.
Potential Drawbacks
Refinancing federal loans eliminates access to income-driven repayment plans and Public Service Loan Forgiveness programs. Private lenders typically offer fewer hardship options than federal programs provide.
Variable rates can increase over time, potentially making loans more expensive than originally projected. Some lenders charge origination fees or prepayment penalties, though the companies listed above generally avoid these charges.
Credit requirements may exclude borrowers with limited credit history or lower scores. Co-signers may be required, creating financial obligations for family members or friends.
Making Your Decision
Compare offers from multiple lenders before choosing a refinancing company. Most lenders provide rate quotes with soft credit checks that won’t impact your credit score. Consider both current rates and potential future changes if selecting variable rate options.
Evaluate the total cost over the life of the loan, not just monthly payments. A slightly higher rate with better borrower protections might provide more value than the absolute lowest rate with fewer benefits.
Calculate potential savings using online refinancing calculators, factoring in your current rates, remaining balances, and desired new terms. Consider whether you might benefit from federal loan protections in the future before refinancing government-issued loans.
Ready to explore your refinancing options? Start by checking your rates with multiple lenders to compare offers and find the best deal for your situation. Most applications take just a few minutes and provide instant rate estimates to help guide your decision.