Should You Refinance Your Federal Student Loans Right Now?

In general, you should consider refinancing if you have a private student loan and can get a refinance with an interest rate significantly lower than your current rate. However, you should also consider non-rate factors – such as the opportunity to change the loan term or the convenience of consolidating multiple loans into one – as well as your personal financial goals and situation.

It can make sense to refinance private loans, since they’re already private. For federal loans, even if you get a better interest rate, it might not make sense to give up those benefits, Minsky says.

By refinancing private student loans, though, you’re typically not giving up much, so the potential to get a lower interest rate from a new lender may be worth it. And, Kumok points out, a lower monthly payment could free you up to put more money towards other financial goals.

How much you’ll save depends on your current interest rate and total debt amount, Kumok says. You can use the monthly difference to invest, pay down your other, higher-interest debt like credit cards faster, save for a down payment or more.

Refinancing Federal Student Loans

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The biggest question, though, is whether you should refinance your federal student loans. While you might get a better interest rate, Minsky warns, doing so might mean missing out on other benefits. Once your refinance federal student loans, you lose access to benefits like:

If you think you might need these programs in the future, Minsky explains, it’s a good idea to avoid refinancing your federal student loans. Once you refinance, there’s no going back and online payday loans Hawaii you lose the federal loan benefits, he says.

This was especially relevant during the COVID-19 pandemic, where the federal government suspended payments and interest on all federal student loans as part of its emergency relief measures, but private student loan borrowers got little to no relief.

Refinancing private student loans could potentially save you money on interest if you can get a low rate, but you shouldn’t refinance federal student loans right now – even if you think you won’t use the benefits.

As part of the government’s response to the COVID-19 pandemic, certain federal student loan payments are in forbearance and not accruing interest. The current forbearance is set to expire on .

Best Student Loan Refinancing Lenders of

  • Laurel Road
  • Earnest
  • SoFi
  • PenFed
  • Education Loan Finance

How We Chose These Lenders

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To find the best student loan refinancing lenders, we looked at the most commonly reviewed and searched for lenders on the marketplace that offered student loan refinancing. Some are lenders that specialize in student loans, while others are larger banks that offer multiple financial products, including student loan refinancing. Then, we cut the list based on the following criteria:

  • The lender must offer refinancing for both federal and private student loans. We want our list to be accessible to all borrowers.
  • We eliminated any lenders that charged origination fees and prepayment penalties. Origination fees increase the cost of borrowing as a whole, while prepayment penalties make it harder for borrowers to make extra payments or pay their loans off early.
  • We eliminated any lenders that did not publicly display their rate ranges, or required any sort of sign-up to see general rate and fee information. We believe that transparency is important, and borrowers should be able to quickly see general rate information in order to easily compare lenders.
  • While we looked at whether lenders made their rate and fee information publicly and easily accessible – as doing so is a sign of transparency – we did not factor the rates themselves into our evaluation of each lender. This is because rates are highly dependent on individual factors such as credit score, income, and location. It’s difficult to make generalizations about a lender’s quality based on the rates they offer, as they might serve different groups of consumers with different financial profiles.