Best Student Loan Consolidation & Refinance Lenders of 2020

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If you’re saddled with student loan debt and worried about making payments on your federal loans during the coronavirus pandemic, you can breathe a sigh of relief. A coronavirus aid bill passed in March pauses payments on federal loans and sets interest rates at 0% from March 13 through Sept. 30, 2020. Private lenders may offer their own special relief programs, or you can refinance your private student loans to save money.

Whether you have federal, private or both types of student loans, consolidating or refinancing them might help you reduce your debt, better manage payments and work toward other financial goals. Too much student loan debt can affect your ability to save for retirement, increase disposable income or qualify for other loans, such as a mortgage. This guide explains the differences between refinancing private student loans and consolidating federal student loans, the pros and cons of each, and the best options for different situations.

Methodology: National student loan refinance companies in this guide are selected based on consumer ratings and availability of products.

No private student loan refinancer is perfect for every borrower. These lenders are a good starting point for most people, but you should research each company on your own.

The Best Student Loan Refinance Companies of 2020

Best for instant decisions.

Splash Financial is a student loan refinance lender operating in all 50 states. Refinancing is available for federal, private and parent PLUS loans, including undergraduate, graduate, MBA, law, dental and medical loans. A specialized refinance program is offered for doctors completing their residency or fellowship.

Highlights

  • Rate types: Fixed and variable
  • Loan terms: 5 to 25 years
  • Loan amounts: $5,000 minimum and no maximum
  • Application or origination fees: No application or origination fees
  • Discounts: Autopay discount available with some lending partners.
  • Deferment or forbearance hardship options: Deferment or forbearance available
  • Co-signer release: May be possible after 12-months of on time payments
  • BBB rating: A+

Best Features

  • Refinancing is available for a broad range of student loans.

  • No prepayment penalty applies.

  • Both fixed and variable rates are available.

See full profile

Best for loan amount flexibility.

College Ave Student Loans offers student loans to borrowers in all 50 states. Undergraduate, graduate and parent loans are available. The lender specializes in simple applications with an instant decision.

Highlights

  • Loan types: Undergraduate, Graduate, Parent Loans, Refinancing, Parent Refinancing, MBA, Law, Dental, Medical and International
  • Loan terms: 5 to 15 years in school for undergrad/grad/parent, 5 to 20 years medical, dental and law schools
  • Loan amounts: $1,000 to up to 100% of the student’s school-certified cost of attendance.
  • Application or origination fees: If a monthly payment is not made within 15 days of the due date, you will be assessed a late charge equal to 5% of the unpaid amount of the monthly payment or $25, whichever is less.
  • Discounts: 0.25% auto-pay interest rate reduction with valid bank account designated for required monthly payments
  • Deferment or forbearance hardship options: Yes – case by case
  • Co-signer release: Yes, if borrower has made 24 consecutive payments on time, with no periods of forbearance or deferment.
  • BBB rating: A+

Best Features

  • Loans are available from $1,000 up to 100 percent of the student’s school-certified cost of attendance.

  • Borrowers can make full payments while in school, or choose to pay interest only, a flat fee or defer payments.

  • College Ave Student Loans have no origination or prepayment fees.

See full profile

Best for online student loan refinancing.

SoFi has offered student loans since 2011. The lender has served more than 250,000 borrowers with more than $18 billion in student loan refinancing. Borrowers with a credit score as low as 650 may be approved. You can apply for student loan refinancing online with SoFi and get an instant decision.

Highlights

  • Loan types: Undergraduate, graduate, MBA, law, dental, medical, parent, refinancing, parent refinancing
  • Rate types: Fixed and variable
  • Loan terms: 5 to 15 years for private student loans, 5 to 20 years for student loan refinance
  • Loan amounts: $5,000 to not disclosed
  • Application or origination fees: None
  • Discounts: 0.25% AutoPay discount is available. If you take out a SoFi loan, you could be eligible for a 0.125% discount on another SoFi loan product.
  • Deferment or forbearance hardship options: Yes, options available
  • Co-signer release: Yes; borrowers can release cosigners with at least 24 months of full principal and interest payments. Terms and conditions apply.
  • BBB rating: A+

Best Features

  • All types of student loans are eligible for refinancing.

  • Lending process is completely online.

  • Loan terms are available from five to 20 years.

  • No late, origination or application fees.

See full profile

Best for loans of up to $350,000.

Citizens Bank offers fixed- and variable-rate private student loans for undergraduate and graduate degrees as well as parent loans. Borrowers can get approved for multiple years of student loans.

Highlights

  • Loan types: Undergrad, grad, parent, refinance for students, refinance for parents
  • Rate types: Fixed and variable
  • Loan terms: Five to 15 years
  • Loan amounts: $1,000 to $350,000
  • Application or origination fees: Save with no application, origination, or disbursement fees.
  • Discounts: Loyalty, autopay
  • Repayment options: Make full or interest-only payments while in school or wait until after graduation
  • Deferment or forbearance hardship options: Economic hardship, military service, post active duty, enrolled or returning to school
  • Co-signer release: Can apply for a co-signer release after 36 consecutive on-time principal and interest payments
  • BBB rating: A+

Best Features

  • Citizens Bank offers multi-year approval loans, meaning that once you get started, you will continue to secure funding for subsequent years in school without needing to go through a credit check every year.

  • Borrowers who are Citizens Bank customers who sign up for auto payments can reduce their interest rates by 0.5%.

See full profile

Best for no application, origination or late fees.

Discover offers personal loans for debt consolidation, home improvement and major purchases. Loan terms from three to seven years are available.

Highlights

  • Loan types: Undergraduate, Graduate, MBA, Law, Dental, Medical, International, International students require a cosigner who is a US citizen or permanent resident. Health Professions Loans, Residency Loans, Bar Exam Loans and Consolidation Loans, refinance
  • Rate types: Fixed and variable
  • Loan terms: Up to 15 years for undergraduates; 20 years for graduates; 10 or 20 years for consolidation
  • Loan amounts: $1,000 to total cost of attendance minus other financial aid
  • Application or origination fees: No application, origination or late fees
  • Discounts: Customers can lower their student loan interest rate by 0.25% while enrolled in automatic payments. Students can also receive an interest rate discount of 0.35% if they select the interest-only repayment option and make interest-only payments during the in-school and grace periods.
  • Deferment or forbearance hardship options: Deferment or forbearance available
  • Co-signer release: N/A
  • BBB rating: A+

Best Features

  • Loans as small as $1,000 are available.

  • Discover has no origination, application or late fees.

See full profile

Best for borrowers with a FICO credit score as low as 650.

Earnest was founded in 2013 and has funded more than $4.5 billion in student loan refinancing to about 50,000 borrowers. You may be approved for a loan with a debt-to-income ratio of up to 65%.

Highlights

  • Loan types: Undergraduate, Graduate, Cosigned Private Loans, Business School Loans, Medical School Loans, Law School Loans, Refinance Student Loans
  • Rate types: Fixed and variable
  • Loan terms: N/A
  • Loan amounts: $1,000 to your total cost of attendance, minus other financial aid. Aggregate loan limits apply.
  • Application or origination fees: No application fee, origination fee not disclosed
  • Discounts: 0.25% Autopay
  • Deferment or forbearance hardship options: Yes. Earnest has multiple options for students having difficulties making payments, including Skip-a-payment, Forbearance, Deferment, Rate Reduction Program, and Term & Rate Modification Program.
  • Co-signer release: Yes, if refinancing through Earnest, you can release the cosigner of previous loan if applying as an individual
  • BBB rating: A+

Best Features

  • There are no origination, application or late fees.

  • You can choose your monthly payment and loan term length.

  • You can use a co-signer on undergraduate or graduate student loans, and student loan refinancing is available.

See full profile

Best for a referral bonus.

Education Loan Finance has offered student loan refinancing since 2015. A division of SouthEast Bank, the management team has more than 30 years of experience in student loans. The lender offers loan terms from five to 20 years.

Highlights

  • Loan types: Undergraduate, Graduate, Parental, Refinance
  • Rate types: Fixed and variable
  • Loan terms: 5 to 15 years
  • Loan amounts: $10,000 or higher
  • Application or origination fees: No application or origination fees
  • Discounts: Auto-pay discount is reflected in approved interest rate, as all borrowers are required to make electronic or digital transfer payment.
  • Deferment or forbearance hardship options: N/A
  • Co-signer release: N/A
  • BBB rating: A+

Best Features

  • There’s no maximum loan amount.

  • All types of student loans are eligible for refinancing.

  • Borrowers with up to a 50% debt-to-income ratio may be approved.

  • ELFI has an A+ rating with the Better Business Bureau.

See full profile

Best for a co-signer option.

LendKey connects borrowers with its network of community and regional banks and credit unions. It manages the application, support and servicing of student loans, while the capital for the loan comes from the financial institution.

Highlights

  • Loan types: Undergrad, graduate, parent, refinancing
  • Rate types: Fixed and variable
  • Loan terms: 5 to 20 years
  • Loan amounts: $2,000 to total cost of attendance
  • Application or origination fees: No application fee, origination fee not disclosed
  • Discounts: 0.25% autopay reduction
  • Deferment or forbearance hardship options: Enrollment, economic hardship
  • Co-signer release: May be available, must meet five minimum requirements: (1) Make required number of payments as indicated in the borrower’s credit agreement during the repayment period (2) Account cannot be in delinquent status (3) Borrower must provide proof of income (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults
  • BBB rating: A+

Best Features

  • Students can consider multiple lenders with a single application.

  • LendKey has no origination or application fees.

See full profile

What Happens When You Consolidate or Refinance Student Loans?

Whether you consolidate or refinance student loans, you combine multiple loans into one. The lender will pay off your loans and issue you a new loan for the total amount you owe.

You can consolidate federal student loans through the U.S. Department of Education. The consolidation will give you one loan payment with a new loan term and fixed interest rate that is the weighted average of your previous rates.

A private lender will allow you to refinance your private student loans, ideally at a lower rate. The new loan terms will be based on your creditworthiness.

You can refinance federal student loans only through private lenders, but combining them with private student loans is not always a good idea. That’s because you’ll lose access to federal income-based repayment plans and loan forgiveness programs.

What Is the Difference Between Student Loan Refinance and Consolidation?

Student loans can come from either the federal government through the Department of Education or a private lender, such as a bank or credit union, a state agency, or an educational institution.

Your options for consolidating and refinancing, and the pros and cons of doing so, may vary depending on whether you have federal student loans, private student loans or both.

Consolidating Federal Student Loans

The federal government’s direct loan consolidation program is free. When you consolidate your federal loans, the Department of Education issues a direct consolidation loan with a fixed interest rate.

The new rate is the weighted average of the interest rates on the loans you’re consolidating, rounded up to the nearest eighth of a percent. That means your new rate will fall between what was your highest rate and your lowest rate.

Because federal student loan consolidation doesn’t lower your interest rate, you may not save on interest, but it can make managing your loans easier with a single monthly payment.

Consolidating your federal student loans requires no credit check and could offer you access to more repayment plans or forgiveness programs.

Rather than consolidate your loans, you could consider changing repayment plans to extend your loan terms and lower your monthly payments. But this also won’t reduce the cost of borrowing.

Refinancing Private Student Loans

When you refinance private student loans, a private lender repays your loans – private, federal or both – and issues a new loan based on your creditworthiness. If you can qualify for a better interest rate, you could save money and lower your monthly payment by refinancing your private student loans.

Refinancing terms for your new private student loan are based on many factors, including your income, debt, employment and credit. In contrast, consolidating your federal loans neither changes the interest that accrues on them nor your eligibility for federal student loans.

Rest assured, you don’t have to choose between refinancing or consolidating your student loans if you have both federal and private loans. An all-or-nothing approach may not work for you.

You could consolidate your federal student loans and refinance your private loans, or you might opt to consolidate some of your federal loans and refinance others. Or you may research your options and decide not to do either.

U.S. News Survey: Student Loan Payments Can Hinder Retirement Savings and Personal Goals

Many borrowers don’t regret their student loans and haven’t explored refinancing them for savings, according to a U.S. News survey of consumers with federal or private student loans. They revealed how much they borrowed, whether their payments are affordable and other details about how their student loans have affected their lives.

Among the survey’s key findings:

  • About half of student loan borrowers said their student loan payments are reasonable.
  • Student loan debt can impede personal goals, including saving for retirement, increasing disposable income and setting aside money for a down payment on a home.
  • Although lenders typically offer hardship options, such as deferment and forbearance, only about half of borrowers said they’ve used them.
  • Just 12% of survey respondents have refinanced student loans, and 22% have consolidated federal student loans.
  • More than half of respondents said they didn’t research lenders before getting a student loan.
  • About 41% of student loan borrowers surveyed said they have regrets about taking out student loans.
  • Interest rate, loan amount, and repayment or hardship options were the top factors student loan borrowers considered when choosing a refinancing lender.

Most student loan borrowers surveyed took out less than $50,000 in loans.

Nearly three-quarters, or about 72%, of survey respondents said they took out $49,999 or less in student loans, and 28% borrowed between $10,000 and $24,999. But about 10% faced six-figure student debt of $100,000 or more.

A little more than half of survey respondents said their monthly student loan payments are affordable.

But about a quarter of student loan borrowers said their student loan payments aren’t affordable. And about 11% have student loans in deferment or forbearance.

Student loan debt can get in the way of personal goals.

Close to half of survey respondents said both saving for retirement and increasing disposable income have been affected by student loan debt. They also said saving for a down payment on a home, planning a wedding, starting a family, qualifying for better credit products and having more career choices were hurt by student debt.

Only about half of student loan borrowers have used hardship options, such as deferment or forbearance.

Student loan hardship options can pause payments when borrowers are in a financial bind, but not everyone is using them. About a third of survey respondents said they’ve used deferment, and less than a quarter have used forbearance. About 17% have taken advantage of the chance to reduce their monthly payments, and about 12% used a grace period extension.

Most student loan borrowers aren’t consolidating or refinancing student loan debt.

About 67% of survey respondents said they haven’t consolidated or refinanced student loans. Federal student loan consolidation is the most popular option among those who have, with 22% of survey respondents choosing it. Nearly 8% refinanced both private and federal loans, and almost 4% refinanced private student loans.

More than half of student loan borrowers didn’t research lenders.

When asked how much time they spent researching student loan lenders, about 56% of those surveyed said they didn’t research any lenders. But about 20% spent up to two hours on student loan research, and 10% spent more than six hours.

Student loan borrowers tried financial aid alternatives before taking out private student loans.

Scholarships are the top alternative to private student loans, followed by jobs in college, student grants and work-study programs, respectively.

Survey respondents are somewhat split on whether they regret taking out student loans.

A little more than half of respondents said they didn’t regret their student loans because they could get jobs in their fields, attend good schools or build credit. But 41% had regrets: that they’re still paying off their student loans, that loans kept them from pursuing other goals or that they couldn’t land a job in their field.

Student loan borrowers said interest rate was the most important factor when choosing a loan.

Asked which factor was the most important when choosing a student loan, 45% of survey respondents said they prioritized getting a low interest rate. Minimum or maximum loan amount was crucial for 32%, and 30% said repayment or hardship options were key.

  • U.S. News ran a nationwide survey in April 2020 through Google Surveys.
  • This survey sampled 500 people in the general American population who visit desktop and mobile sites where Google conducts surveys.
  • The survey asked 10 questions related to student loans.

Are You Eligible to Consolidate or Refinance Your Student Loans?

Before you proceed with consolidating or refinancing, check that your loans are eligible and make sure your choice is the right fit.

Federal Student Loan Consolidation Eligibility

Private Student Loan Refinance Eligibility

Eligibility can vary by lender, but many private student loan refinancing companies look at these factors:

  • Credit score. You’ll usually need a score of 670 or higher, which falls in FICO’s good range. But even if you qualify for refinancing, you may not get a lower interest rate than you have now.
  • Credit history. Lenders typically review your credit history for derogatory marks, such as late payments, and consider this information to determine your interest rate. You can order free copies of your credit reports – now weekly through April 2021 – at AnnualCreditReport.com to monitor for errors and dispute them, says Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.
  • Proof of stable work and income. Some lenders may have minimum income requirements.
  • Debt-to-income, or DTI, ratio. This is the percentage of your total monthly income that goes toward debt payments, and it can help lenders determine if you’ll have trouble making your loan payments. A lower DTI ratio is better because it indicates that you have more room in your monthly budget.

Most lenders don’t disclose their maximum DTI ratio for applicants, but among those who do, it’s often between 40% and 50%. You can reduce your DTI ratio by switching to longer repayment plans, such as income-driven repayment for federal loans, Kantrowitz says.
Also, lenders may require you to meet other conditions for refinancing private student loans. If you can’t qualify on your own, some lenders might approve you with a creditworthy co-signer.

Lenders could restrict refinancing to those who:

  • Complete degrees
  • Have certain types of degrees, such as law or medicine
  • Live in certain states

Should You Consolidate or Refinance Your Student Loans?

Use this chart for a side-by-side comparison of consolidating federal student loans with refinancing private student loans.

Federal Direct Consolidation Loan Private Student Loan Refinancing
Are federal loans eligible? Yes Yes
Are private loans eligible? No Yes
Will managing your monthly payments become easier? Yes Yes
Is a credit check needed? No Yes
Can you lower your interest rate? No Maybe, if you have good credit
Can you use a federal repayment plan? Yes No
Can you qualify for federal forgiveness programs? Yes No

Could You Save by Consolidating or Refinancing?

Congratulations! You just graduated and were hired for your first job earning $65,000 a year in San Francisco.

You have three federal direct subsidized loans: one for $10,000, one for $6,000 and the other for $5,000. Once you begin to pay down your student loans under the standard repayment plan, you will spend 10 years and $27,409, including interest, to wipe out your debt.

Consolidating vs. Refinancing

Here’s how this scenario could change by either consolidating your federal loans or refinancing them with a private lender.

New APR New monthly payment (compared with the original terms) Interest paid (compared with the original terms) Total paid
Consolidate with a 20-year term 5.538% $145 $13,778 $34,778
Refinance with a five-year term 4.99% $396 $2,772 $23,772
Refinance with a 10-year term 5.25% $225 $6,037 $27,037
Refinance with a 15-year term 5.5% $172 $9,886 $30,886

Be sure to compare the monthly payment with the total payment when you are considering consolidating or refinancing student loans, Kantrowitz says. Your monthly payment could be lower – sometimes much lower – but you will pay thousands of dollars more in interest.

Of course, you’ll want to compare more than just your monthly payment and interest rate to determine whether consolidating or refinancing your student loans might make sense.

How Can You Choose Between Consolidating or Refinancing Your Student Loans?

Borrowers in certain circumstances may be better off consolidating their loans with the federal program than refinancing. Consolidation does nothing for your interest rate, but it does make your loans easier to manage, says Travis Hornsby, founder of Student Loan Planner, a consulting firm that helps borrowers manage student loans.

Consolidation could make sense if:

  • You’re having trouble making payments. Consolidating and increasing your loan’s term could lower your monthly payment. You’ll keep access to federal loan repayment plans as well as deferment or forbearance, which can offer a safety net.
  • You’re struggling to manage multiple loans. By consolidating, you will combine all of your federal student loans into one new loan and get a single monthly payment.
  • You plan to work in a profession eligible for loan forgiveness. If you have federal loans that aren’t eligible for a federal loan forgiveness program, consolidating those loans could make them eligible. But don’t consolidate loans that are eligible for forgiveness if you’ve been making payments on them because that will restart the clock on forgiveness.
  • You have a loan in default. You may be able to consolidate your loan and bring it out of default.

On the other hand, choose refinancing “if you’re trying to reduce your interest rate and you need to pay off your balance in full,” Hornsby says. Refinancing your student loans with a private lender could be a good idea, as long as:

  • You qualify for better terms. If you have good credit and stable income and meet other requirements, you may qualify for a better interest rate that can decrease your monthly payment and the cost of the loan.
  • You want to combine your federal and private student loans. You’ll have to refinance your loans with a private lender if you want to combine private and federal loans.
  • Your income is stable. Refinancing federal student loans means you’ll no longer be eligible for income-driven repayment plans or federal hardship programs.
  • You don’t plan to use federal forgiveness options or alternative payment plans. Private loans aren’t eligible for these federal loan programs.

How Can You Choose the Best Student Loan Refinancing Company?

When comparing private student loan refinancing companies, you can select the right one for your needs by reviewing eligibility requirements and these key factors:

  • Fixed-rate ranges. Loan interest rates will vary based on your lender and credit as well as loan terms and market rates.
  • Variable-rate ranges. Variable-rate loans may initially have lower interest rates than fixed-rate loans.
  • Rate check option. Some lenders let you prequalify or obtain estimated rates and terms without hurting your credit.

Loan and Refinancing Terms

  • Maximum loan amount. Most people won’t need to worry about maximum loan amounts, which can range from $75,000 to $500,000. In some cases, lenders don’t have maximums. But this could be a concern for some borrowers with an exceptionally large amount of student loan debt.
  • Minimum loan amount. Many student loan refinancing companies will require you to refinance at least $1,000, and some may expect you to refinance more. If you have a small amount of student loan debt, you might not be able to refinance it.
  • Loan repayment period. Most refinancing lenders offer terms from 10 to 20 years. Choosing a shorter term could increase your monthly payment but reduce the interest you pay and get you out of debt sooner.
  • Autopay deduction. Many lenders offer borrowers a 0.25% annual percentage rate discount if they sign up for autopay.

Repayment and Hardship Options

  • Repayment options. Some lenders may offer different repayment plans, such as interest-only payments for a certain period of time.
  • Deferment. Some lenders allow you to put your loans into deferment, which lets you pause payment on some types of subsidized loans in certain conditions. Generally, deferment is for borrowers who go back to school, join the military, or begin a residency or service program, such as the Peace Corps.
  • Forbearance. Lenders may offer forbearance options that allow you to stop making payments during an economic hardship, such as a serious illness or job loss.
  • Other hardship options. Lenders might provide other options, such as temporarily lowering your monthly payment or interest rate or extending your grace period.

  • Origination fee. Some student loan refinancing companies charge a percentage of the amount you’re refinancing as an origination fee, though it is rare.
  • Late fees. If your monthly loan payment is late, the lender may charge you a late payment fee – say, $15 – or a percentage of your monthly payment, such as 5% of your monthly payment amount. Some lenders won’t charge the fee until you’re 15 days late.
  • Returned payment fee. Lenders may charge a fee if your payment is returned.

Overall, interest rate and ease of refinancing are the most important considerations when refinancing, Hornsby says, and that can guide your decision-making. Also, take a look at how generous the forbearance terms are and which servicer the company uses.

“That said, student loan refinancing is really a commodity,” Hornsby says. “You’re looking for the lowest interest rate with the least amount of pain in the application process. Luckily, that process is generally pretty fast and easy.”

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