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How much does it cost to refinance a student loan?

Refinancing may make your student loan debt more manageable. And in most cases, there’s no upfront cost to refinance student loans. Learn more.

Refinancing your student loans can have big perks. It can lower your monthly payments, reduce your interest rate, or even help you pay off your loans faster (sometimes all three). It essentially replaces your existing loans with a single, new loan — ideally one with a better rate or terms.

Even better? In most cases, there are no upfront costs to student loan refinancing. If you’re considering refinancing your loans, here’s what you need to know. 

With Credible, you can compare student loan refinance rates from multiple lenders in one place.

Refinancing your mortgage typically comes with hefty fees, but refinancing student loans? That’s usually free.

The student loan refinancing business is competitive, so lenders often offer fee-free refinancing as a way to entice borrowers with good or excellent credit to apply. That typically means no origination fees and no application fees. Lenders may even offer other perks to refinance your student loans with them, like unemployment protection.

For the most part, any fees associated with refinancing will come after you’ve finalized your loan. 

Some of these fees include:

You can avoid these fees simply by making your payments on time and ensuring your accounts have plenty of funds to cover the charge. You might also consider setting up automatic payments, as this will sometimes qualify you for a rate discount.

Refinancing your student loans is a fairly simple process. While the exact process and eligibility requirements vary by lender, these are the basic steps: 

The higher your credit score is, the lower your interest rate will be. And the better your rate, the more you stand to save.

Pull your credit well ahead of applying for a refinance. You can request free copies of your report each year from the main credit bureaus, Equifax, Experian, and TransUnion. If your score is less than ideal, spend some time improving it before refinancing.

Once you’re ready to refinance, get quotes from at least a few different lenders. Compare the rates, terms, and any fees associated with the refinance, and look up lender reviews, too. You should also consider any deferment, forbearance, or alternative repayment options they may offer. These can help ease financial strain if you find yourself struggling to make payments down the road.

You can use Credible to compare student loan refinance rates without affecting your credit.

Next, it’s time to complete the lender’s full application. You’ll also need to submit various documents with your application, including recent pay stubs and a statement from your current student loan lender.

Finally, start making payments on your new loan. Your lender should give you a payment stub, or you may be able to set up automatic payments from your bank account.

Make sure to get written confirmation that your previous loan was paid off too, and store the document somewhere safe for future reference.

You might have heard the term "student loan consolidation." While this is similar to student loan refinancing, it’s not exactly the same. First, consolidation is only available on federal student loans, while refinancing is available for both federal and private student loans.

With federal student loan consolidation, you combine multiple federal loans into a single Direct Consolidation Loan. This will simplify your monthly payments, but your new interest rate will be a weighted average of all your existing loans — so you may or may not receive an interest rate reduction by consolidating.

With a refinance, you can combine private loans, federal loans, or a variety of both into a new, single loan with a private lender. It’s possible you’ll be able to get a lower interest rate, especially if your credit has improved since you first took out your loans. But refinancing federal loans into a private loan isn’t always a good idea, because you’ll lose benefits and protections that come with federal loans, like student loan forgiveness. 

Refinancing can usually save you quite a bit of money, but the exact amount depends on your repayment terms, your current interest rate, your loan amount, and the new rate you’re eligible for. 

Let’s look at an example: Say you currently have student loan debt of $90,000 and an interest rate of 6.8%. You have eight years left on your loan. If you were to refinance into a new 10-year loan, this time at a 3.5% interest rate, this is what you’d stand to save:

To see exactly how much your refinance could save you, use the Credible student loan refinance calculator. You’ll need your current loan’s interest rate, balance, and remaining term.

As with any financial product, refinancing your student loans comes with both advantages and drawbacks. Here’s a look at some of each. 

Your credit score will play a big role if you choose to refinance your student loans. It’ll influence not only your eligibility, but also what interest rate you qualify for.

The exact credit score you’ll need will depend on the lender. But generally speaking, you’ll need a credit score of at least 670 or above. If you can get your score higher — 720 or above — you’ll typically qualify for the best interest rates. 

If you’re ready to refinance, Credible lets you easily compare student loan refinance rates from various lenders in minutes.

Since refinancing your student loans requires a hard credit check, it’ll likely hurt your credit score but only slightly (and only temporarily). A hard credit inquiry should only reduce your score by about five points, according to FICO. And keep in mind that paying your new, refinanced student loan on time, as agreed, every month can go a long way toward building your credit.

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