The vast majority of today’s college graduates will wear caps and gowns while carrying significant amounts of student loan debt. Indeed, a recent College Board survey found that by the time a borrower graduates with a bachelor’s degree, they had racked up an average of $28,400 in student loan debt, with some borrowers carrying much larger balances.

It’s possible that repaying your student loans may take years, or even decades, depending on the amount you owe and the conditions under which you owe it. However, what if the conditions of the loan you signed up for when you were 18 years old no longer apply? What if you’ve taken out loans for eight semesters and are now unable to keep track of when they’re all due?

Five ways to refinance your student loans

If you’re prepared to refinance your student loan, there are five steps to follow:

1. Verify your credit

One of the first actions a lender will do when you seek to refinance your student loans is to verify at least one of your credit reports and credit scores. For this reason, you should frequently review your Equifax, TransUnion, and Experian report to look for any problems or inaccuracies. The Fair Credit Reporting Act (FCRA) allows you the right to dispute any inaccuracies you find on a credit report with the relevant credit-reporting agency.

Prior to submitting loan applications, it’s a good idea to understand how your credit now stands. Before attempting to refinance, you might endeavor to repair your credit if you discover that it isn’t in the ideal condition.

2. Look around for the greatest deal

One of the most important steps in effectively refinancing your student loans is to research student loan refinancing rates and check with many lenders to obtain the lowest rate. In fact, if you’re searching for a new loan or credit card, you should rate shop.

To compare lending rates and costs, do an internet search. Take advantage of prequalification tools that lenders may provide as they only need a light credit query on your credit record. You may examine the kinds of rates and loan conditions you could be eligible for if you refinance by becoming pre-qualified. Using this data, you may determine if refinancing might improve your financial situation in terms of monthly payments or overall interest paid.

3. Select a loan proposal

You’ll be better able to choose the solution that works for you after you’ve studied (and ideally prequalified for) various loan offers. You may be able to determine your chosen repayment terms in conjunction with the lender you decide to deal with.

You may be able to get a cheaper interest rate and pay off your debt more quickly with a shorter loan period (for example, five years). Your monthly payment would probably be greater, however. On the other side, extending the loan period might result in smaller monthly payments and simpler budget management. In exchange, you would have to pay higher interest throughout the course of the loan and wait longer to pay it off.

4. Complete a legitimate loan application

You’ll need to complete a formal loan application after you’ve selected your chosen lender and loan offer. Before your loan may be granted, you must do this step, even if you went through a lender’s prequalification procedure.

The lender will probably do a hard credit inquiry at this stage in order to obtain your complete credit record. Additionally, the lender will want information that was not requested on your prequalification form. You must provide the co-details signers if you’re applying with one.

5. Sign the loan agreements and begin making payments on your new loan

You will sign the loan documentation after your loan has been authorized. Whereas you previously had to sign loan paperwork in person, via fax, or by mail, most student loan businesses now conduct the whole procedure online for maximum ease, thanks to technology.

Student loan forgiveness

Forgiveness is only available for federally-guaranteed loans. Even though direct loans have mostly supplanted Stafford loans since 2010, both types of loans are still considered to be in good standing. Consolidating several federal loans into a single direct consolidation loan might simplify your financial situation and open up new income-based repayment possibilities. Forgiveness is not available for borrowers who have taken out debts from private lenders or lending businesses, which are not part of the federal government.

President Trump rejected a bipartisan measure in 2020 that would have reversed new restrictions that made it far more difficult to get debt forgiveness for borrowers with federal student loans who attended for-profit institutions and claimed the school deceived them or breached particular laws.

Official loan application

Following the selection of a lender and loan offer, you should go on to complete an official loan application as soon as possible. You will still be required to complete this step even if you have already gone through the prequalification procedure with a lender in the past.

A comprehensive review of your credit history is indicated when a potential lender does what is known as a “hard credit inquiry.” You are going to be held accountable for providing the lender with the information that was missing from the prequalification form that they sent to you. You are necessary to include the other person’s details as a co-contact signer if you are submitting your application with the assistance of another individual.

How to refinance student loans

You are allowed to refinance your federal student loans; however, in order to do so, you will need to engage with a private lender. If you want to refinance your federal student loans, you may do so. This would mean that you would no longer have access to the benefits and safeguards provided by the federal government, such as income-driven repayment plans, deferment and forbearance choices for your student loans, and forbearance possibilities.

Student loan refinance rates

According to the most recent projections, the interest rate on Federal student loans for undergraduate students would remain at the present level of 4.99 percent until the academic year 2022-2023. The rate used to be flexible; however, it was only recently converted to a set rate. On the other hand, the interest rate for graduate students who take out unsubsidized loans or PLUS loans ranges between 6.54 percent and 7.54 percent of the total amount of the loan, depending on the type of loan they choose. This is in contrast to the interest rate for undergraduate students who take out subsidized loans, which is only 5.54 percent of the total amount of the loan. In comparison, the interest rate for undergraduate students who take out subsidized loans is just 6.54 percent.

People Also Ask

1. Should I refinance my student loans?

If you become eligible for a reduced interest rate on your private student loans, you may want to consider refinancing them as soon as possible. In most cases, you won’t be able to refinance your student loan until after you graduate.

If you are currently making payments on a federal student loan under an income-driven repayment plan and/or are seeking a federal debt forgiveness program, you should not refinance your federal student loans. Refinanced federal student loans are ineligible for federal loan programs.

2. What does it mean to refinance student loans?

By consolidating your student loans into a single loan, you may be able to save money, in the long run, thanks to a lower interest rate or enjoy lower monthly payments due to a longer repayment period.

3. Is it worth it to refinance a student loan?

Assuming you meet the requirements for a reduced interest rate, yes. A reduced interest rate will reduce your monthly payment and provide you with more flexibility with your budget. You may save money on interest over time and get out of debt sooner by selecting a more rapid payback plan.


1. Can student loans be forgiven if refinanced?

Borrowers of private loans are not eligible for any kind of universal debt forgiveness program. Although these safeguards are seldom as comprehensive as those provided by the federal government, some private lenders do provide them.

2. How do I pay off 100K in student loans?

ages 13 to 20 Loans from the federal government have a set payback period of 10 years, although it often takes borrowers between 13 and 20 years to pay off $100,000 in debt.

3. Does refinancing hurt your credit?

While refinancing will have a negative impact on your credit score in the short term, it might be beneficial in the long run. Lenders want to see borrowers who have reduced their total debt and/or their monthly payments via refinancing. You may see a temporary drop in your credit score, but it usually recovers within a few months.

4. Are student loans forgiven after 20 years?

Federal student loan borrowers who enroll in one of four income-driven repayment programs are eligible to have the remaining balance of their loans forgiven after 20 or 25 years of making on-time payments, respectively.

5. Will student loans be forgiven after 10 years?

120 “qualified payments,” or 10 years of payments if completed annually, are required for federal student debt forgiveness.


Prior to taking any action, you should evaluate whether or not refinancing your student loans is in your best interest. It’s not a good idea for everyone, particularly those with federal loans that have low or moderate interest rates. Second, before going shopping, you should see what your credit score is. A credit score of 650 or better is often required to qualify for the best interest rates offered by lenders. If your credit score prevents you from qualifying for the best loan conditions, a co-signer with better credit may be able to help.

Submit your application to a few of the best lenders you can find. It may assist you to acquire the best possible rate and boost your chances of approval. After that, the only thing standing between you and a new loan on better terms is some paperwork. Keep making payments to your current lender for your student loans after signing the transfer paperwork unless you hear otherwise.

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