Struggling to remain current on your student loans? So are nearly 1 out of 4 student loan holders. Approximately 44 million U.S. residents have student loans, and they’ve racked up a combined total of $1.3 trillion in debt. Of that total, around $31 billion loan payments are seriously delinquent, which means they’re more than 90 days past due.


If you’ve fallen behind on your student loan payments, you might be scared to file a return for the upcoming tax season. After all, the IRS is notorious for garnishing federal refunds. You can temporarily postpone loan payments with a forbearance or deferment, but what happens after that? Bankruptcy generally doesn’t get rid of student loan obligations, so you need a long-term solution – like student loan refinancing.

What is student loan refinancing?

Student loan refinancing is a popular method of debt management for former – and sometimes current – students. Here’s a quick rundown of what happens when you refinance student loans:

  • You meet with a lender and discuss your options.
  • If you are a good candidate (more on that later) for loan refinancing, you submit an application for a new loan.
  • Your new loan replaces your previous student loans, so you just have one loan to repay.
  • The lender pays off your student loans, and you repay the lender instead of the original agencies that issued your student loans

This is a convenient option for many student loan holders because they only have to remember to make one monthly payment. Also, you may end up with a lower interest rate after you refinance your student loans.

Is there anyone who shouldn’t refinance their student loans?   

Student loan refinancing isn’t a practical option for everyone, especially if you have federal loans. If you have a documented disability, consider applying for loan forgiveness first. You may also qualify for a full or partial loan discharge if any of the following apply:

  • You paid for courses at a college that closed before you completed your degree program.
  • You were a victim of identity theft, so the loans you’ve been paying off aren’t actually yours.
  • You plan to work in the field of public service as a teacher, nurse, law enforcement professional, or other qualifying position.
  • You qualify for an income-based repayment plan that may result in balance forgiveness after a specific number of on-time payments.

You should also hold off on applying for student loan refinancing if you have bad credit or a lack of stable income. There’s a strong chance that your application will get denied, and you might get stuck with a hard inquiry on your credit report.

What’s the best way to refinance a loan?

The best way to refinance your student loans depends on your personal preferences. A lender can help you figure out how much you can comfortably afford each month based on your current income and expenses. You can also discuss whether you prefer a fixed-rate loan or a variable-rate loan.

The interest rate on a fixed-rate loan remains the same whether you have the loan for a few months or a few years. The interest rate on a variable loan changes depending on the index connected to the loan. A variable-rate loan might initially be cheaper than a fixed-rate loan, though. That potentially makes it a safe choice for applicants on a tight budget that have plans to drastically increase their income soon.

What are some trusted companies that handle student loan refinancing?

You might be able to refinance your student loans by meeting with a representative from your bank or credit union. If you prefer to work with a company that handles a high volume of refinancing requests, consider the following companies:


SoFi is ideal if you’re a loan applicant with excellent credit and a high income. You need a FICO score of at least 650 to get approved, but the average borrower has a 766 FICO. The average borrower also has an annual income of $124,630.

Interest rates range from 2.58% to 7.25% Fixed-rate and variable-rate loans are available, and loan terms range from 5 years to 20 years.


CommonBond appeals to college graduates that want to make a difference in the world. The company works with Pencils of Promise to send children in underdeveloped areas to school. Each time a new applicant gets approved for refinancing, CommonBond pays for a child’s education.

You need a FICO that’s at least 660 to get approved, as well as a stable income. Interest rates range from 2.76% to 7.25% depending on whether you request a fixed-rate loan or a variable-rate loan. You can request up to 20 years to repay a loan.


If you’re responsible but have little to no credit history, Earnest could be the right refinancing option for you. The company has no minimum credit score requirement, nor does it allow co-signers. An innovative underwriting approach considers all aspects of your financial health, including retirement contributions and the balance in your savings account.

Loan rates range from 2.57% to 6.39%, with variable-rate loans generally starting with lower rates than fixed-rate loans. You have between 5 and 20 years to repay your loan. If you hit a rough financial patch, you can request a forbearance or deferment.

Not sure the refinancing companies above are a good fit for you? You can also check out LendKey, Laurel Road, and Citizens Bank when you’re ready to refinance your student loans.

You don’t have to let student loans ruin your financial future. Escape the high interest rates and unmanageable payments of your student loans with help from a refinancing company.

Leave a Reply

Your email address will not be published. Required fields are marked *