If you’re considering refinancing and want to know how to refinance student loans, your first step is to take stock of your present loan situation. Here’s some basic information you should collect:
- How much debt you have
- How many student loans you have
- What your monthly payments are
- Who your present lenders and loan servicers are
- Which loans are in repayment
Your eligibility to refinance or consolidate will mostly vary by which lender you refinance with, as well as the status of your present loans.
Both the U.S. Department of Education and many private lenders require that your loans be in their grace period, repayment, or deferment in order to be eligible for refinancing.
Borrowers who are not U.S. citizens or permanent residents should contact private lenders directly to understand their eligibility to refinance; some U.S.-based lenders will only lend to international graduates if they have a U.S. co-signer.
While you may be able to refinance your loans right after graduation, consider that all but a handful of lenders will make you began repaying your loans immediately instead of honoring your six-month grace period.
Refinancing Federal Loans
Generally, you can refinance your federal student loans with the government or with a private lender. If you’re considering refinancing with the U.S. government, learn about the Direct Consolidation Loan and its eligibility requirements.
Many private lenders will refinance federal student loans. Note that if you refinance your federal loans with a private lender, you’ll lose the borrower protections offered by the federal government. Ask your private lender what protections it offers so that you’re clear on what options you have for deferment, etc.
Refinancing Private Loans
If you wish to refinance private loans, you cannot refinance these loans with the U.S. government and need to go through a private lender; your eligibility to refinance is based on the lender’s specific policies. Private lending institutions vary, on a case-by-case basis, in their refinancing options and fees. You’ll need to research what benefits and conditions each lender offers to find the best private loan for your lifestyle. Note that while you cannot refinance private student loans with the government, you can generally refinance government student loans, private student loans, or both with a private lender.