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How to Refinance Your Student Loan

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Sarah Li Cain
Updated November 15, 2022
5 Min Read

When it comes to saving money on your student loans, refinancing them – when done correctly – can be a great idea. The good news is that it’s simpler than you might think since it boils down to shopping around for the best rates and going through the application process.

Before you go ahead with the refinance, it’s best to determine whether it’s the best choice for your situation. You’ll also need to learn the steps you need to take to refinance your student loan successfully. 

How to refinance your student loan in 6 steps 

1. Determine whether refinancing is the right choice

Yes, refinancing your loans may help you save money, but it’s not the right choice for everyone. For instance, you may lose unique benefits if you refinance certain student loans. Plus, you’ll need good credit if your intention is to refinance to a lower interest rate. If your credit isn’t great, the rates you may qualify for may be less than desirable.

Take some time to weigh the pros and cons. If you decide to refinance, move onto the next step. If not, you can take this opportunity to consider alternatives if you still want to save money on your loans. 

2. Do your research

It’s a smart idea to look at multiple lenders because each one has its own advantages and drawbacks. Plus, there may be some lenders that offer features that are best suited for your needs. You may also be able to see the types of rates and repayment options that you may qualify for. 

You can do a quick search for the types of features you’re looking for and come up with a shortlist of contenders. Splash Financial is a student loan refinancing marketplace and technology platform that partners with credit unions and banks to make your research fast and thorough.

3. Get quotes from multiple lenders

Once you have a list of lenders you’re interested in, it’s time to get quotes for rates and terms you may qualify for based on your financial profile. In most cases, you can check what you may qualify for through a soft credit check. What this means is that your credit score won’t be affected. If you really want to go with a lender that does not offer this option, make sure you’re really interested before deciding to take that step.

To receive a quote, most lenders will ask you to provide your name, address, amount of student loan debt, your income, monthly housing payment, and degree details. In some cases lenders will ask you to create an online account to revisit your quotes later. 

Typically, you should be able to see what you qualify for within minutes. If you meet the lender’s eligibility criteria, you may see several offers with a proposed interest rate and different repayment terms, such as ones for five, 10 or 20 years. 

Depending on the lender, you may be offered for variable or fixed interest rates. While fixed interest rates don’t change throughout the life of your loan, variable rates do depending on the terms. It usually starts lower for a certain period of time, and may go up depending on market conditions. 

4. Decide on a lender and terms

When you feel you have enough quotes, it’s time to compare what you qualify for with each lender and decide which one you want to go with. 

It might be a smart idea to go with the lender with the lowest rate. However, think carefully about how much you might save — some lenders charge application or origination fees, for example. 

Also, you may want to lower your monthly payment if you’re really finding it difficult to make payments. Though you can do that with a longer repayment period, it could also mean you’ll pay more in interest overall. 

Other factors to take into account are whether there are any protections to you as a borrower. For instance, some lenders have more generous forbearance terms or have unemployment protection. If customer service is important to you, it might be worth calling them up to see how representatives respond.

5. Submit the application form

You will still need to submit a full application form even if you got pre-qualified from your lender of choice. When proceeding, it’s best to gather all the documentation you may need.

Some of these documents may include:

  • Social Security number
  • Government-issued ID
  • Current loan statements 
  • Proof of income
  • Proof of residency
  • Proof of graduation

\ Keep in mind lenders will ask you to agree to a hard credit check, which could affect your credit score.

Once you have all your documentation, follow the instructions the lender has when submitting your application. In some cases, the lender may ask for additional information in order to process your application. 

Depending on the lender, it could take several days before you receive a decision. If approved, you’ll need to sign additional documents to accept your new loan and for the lender to pay off your outstanding one. If denied, the lender will send you a letter stating the reason why. You can use this information to help you qualify for a loan in the future. 

6. Wait for loan payoff

Even if you’ve been approved for a refinance, you’re still responsible for making payments on your old loan until your new lender notifies you the refinance process is complete. Otherwise you could face risks such as paying late fees.

Should you refinance your student loan?

Refinancing your student loan is not a decision to be taken lightly. While you may save money, doing so could mean losing certain benefits.

\ Most experts generally don’t recommend refinancing federal student loans because of the loss of unique benefits you’ll have. For one, federal student loans offer government programs like income-driven repayment plans and other benefits, such as the pausing of payments from the CARES Act. 

Refinancing to a private student loan means you’ll lose out, and these benefits can come in handy if your income situation changes. 

Generally, refinancing makes sense if you have good credit and a high-interest private student loan. In this scenario, you’ll most likely benefit the most from the savings in interest costs.

Student loan refinance alternatives 

If you decide not to refinance but still want to save on your loan payments, you can consider these alternatives:

  • Make additional payments: Some lenders don’t charge prepayment penalties, so you can make additional payments to bring down the loan principal faster, saving you in interest charges. 
  • Raise your credit score: if the reason you didn’t refinance was because your credit wasn’t great, you can work to build your score over time. When your credit situation is better, you can attempt to refinance again. 


How long does it take to refinance a student loan?

Refinancing a student loan can take several days to weeks depending on your lender. 

What credit score do you need to refinance student loans?

While there isn’t a set credit score you’ll need to have to refinance student loans, most lenders want applicants to have a good credit score. Plus, the higher your score, the more likely it is you’ll qualify for competitive rates. 

What is not a good reason to refinance student loans?

You may not want to refinance your student loans if you don’t want to lose the benefits that come with federal student loans such as income-driven repayment plans. 

Does refinancing student loans hurt your credit score?

If you’re getting quotes for refinancing, most lenders will conduct a soft credit check which won’t affect your score. However, if you submit a full application, you’ll most likely need to agree to a hard credit inquiry, which may affect your credit score.