Best student loan refinance companies and expert advice for choosing a lender

Is this the right time to take a fresh look at your student loans? It could be. After all, reviewing your educational financing options is an important strategic move if you want to ensure you’re in the best possible financial position. Plus, planning ahead helps you avoid last-minute scrambles when those tuition deadlines arrive.

For students dealing with unfavorable loan terms, such as high interest rates, or those juggling multiple federal and private loans, refinancing through a private lender could offer a solution. By refinancing your student loans, you may be able to streamline your payments and potentially secure better rates than what you currently have.

However, it’s crucial to understand that private refinancing companies operate independently, and each has unique terms and conditions for lending. To find the refinancing package that aligns with your financial circumstances, you’ll need to compare multiple lenders carefully. To help you do that, we’ve put together a list of some of the best student loan refinance companies to consider along with expert advice on how to choose a lender.

See your student loan refinance options online now.

According to our comprehensive analysis, here are our picks for the best student loan refinancing companies:

Best for low rates: Earnest

If you’re looking for low rates when refinancing your student loans, Earnest is a great place to start.

Earnest offers fixed-rate student loan refinancing with annual percentage rates (APRs) starting at 4.69% or variable-rate student loan refinancing with rates starting at 5.89% with autopay discounts.

That said, student loan interest rates can vary based on your situation, and they can change over time. So, it’s good to compare providers and see what the lowest rates are based on your circumstances.

Best for parents: PenFed Credit Union

Helping your kids pay for their education can be a great gift, but sometimes parents need to refinance too.

While you should still compare rates for different providers, one advantage of refinancing with PenFed Credit Union is that parents with Parent PLUS Loans can transfer this debt to their children. That can be helpful in certain situations.

For example, if you agreed to help your children pay for college for a few years, but now they’re more established in their careers and have the money to make student loan payments on their own, transferring the debt might be best for your family.

Best for those with good credit: Laurel Road

If you have a good credit score and a solid personal finance track record, one of the best student loan refinance lenders for your situation could be Laurel Road.

This student loan refinance lender offers competitive rates, especially if you refinance while opening a Laurel Road Linked Checking account and setting up direct deposits. Doing so can get you an APR starting at 4.97% when factoring in auto-pay discounts.

In addition to good credit helping you qualify for a low refi rate, a high score also might indicate experience managing multiple financial accounts. For example, you may have built a good credit score by effectively managing multiple credit cards and car loans, along with your student loans. If that’s the case, you might also be comfortable adding this checking account to get a better student loan refinance rate.

How much can you save with refinancing? Learn more here.

Best for those with bad credit: MPOWER Financing

If you have bad credit, it can be harder to qualify for student loan refinancing, especially at a competitive interest rate. One possible solution is to refinance with MPOWER Financing.

This lender is often used by international students, but you don’t have to be from outside the U.S. to use it. MPOWER does not require a credit score or credit history to qualify for refinancing.

While your credit can still play a role in this company’s refinancing decision, the company also considers your future earnings potential, which could help you qualify.

Best for flexible repayment options: SoFi

If you want flexibility in your student loan payments, SoFi could be a good choice. When refinancing student loans with this lender, you can choose from a variety of payment options. These include five-, seven-, 10- and 15-year loan terms, offered as either fixed- or variable-rate loans. SoFi has no prepayment fees, and there are potential options for loan deferment or forbearance if you experience financial hardship.

What to keep in mind while choosing how to refinance your student loans

When refinancing student loans, interest rates should be a primary consideration, but it’s important to look beyond advertised rates and understand the difference between fixed and variable rates. Fixed rates offer stability with consistent monthly payments, while variable rates may start lower but can change over time depending on the overall rate environment. 

Loan terms and repayment options are equally important factors. Shorter terms typically come with higher monthly payments but lower overall interest costs, while longer terms reduce monthly payments but increase the total interest paid. “A shorter repayment term might be the way to go if your priority is getting the lowest interest rate possible and you can handle a higher monthly payment,” Brian Walsh, Ph.D., a certified financial planner (CFP) at SoFi, says.

Evaluate whether a lender offers flexibility such as hardship forbearance, deferment options or the ability to adjust payment dates. Some refinancing companies also provide unique benefits like career coaching or temporary payment relief during job transitions.

“Borrowers should carefully examine each offer’s terms and conditions. Look for features like autopay, interest rate discounts, forbearance options and loan forgiveness programs,” says Michael Hammelburger, a chartered financial analyst (CFA) at The Bottom Line Group.

Don’t overlook fees and eligibility requirements when comparing lenders, either. Some companies charge origination fees or prepayment penalties that can significantly impact the total cost of your loan. Each lender also maintains different credit score requirements, income thresholds and degree specifications. 

Who should refinance their student loans?

Student loan refinancing generally makes the most sense for borrowers with high-rate private student loans who have established strong credit and stable income since taking out their original loans. Borrowers who have significantly improved their financial standing since graduation can often qualify for substantially lower interest rates, potentially saving thousands of dollars over the life of their loans. 

Those with multiple private loans can also benefit from the simplified management of consolidating various payment dates and loan servicers into a single monthly payment.

Borrowers with federal student loans, though, should exercise caution before refinancing. Refinancing federal loans converts them to private loans, permanently forfeiting valuable government protections like income-driven repayment plans, deferment options and potential loan forgiveness programs. Those working in public service, healthcare, education or other fields that might qualify for student loan forgiveness should generally avoid refinancing their federal loans unless they’re certain they won’t need these benefits.

Those with unstable employment or inconsistent income streams may want to delay refinancing until their financial situation stabilizes. Similarly, those with credit scores below lender thresholds should focus on improving their credit before applying, as better scores translate to more favorable refinancing terms. “If your credit score is low, work on improving it before refinancing,” Hammelburger says. 

Borrowers approaching the end of their repayment period may also find limited financial benefit from refinancing, as the potential savings diminish as the outstanding loan balance decreases.

The bottom line

These are some of the best student loan refinance companies to consider, but take your time researching and comparing providers before going forward with one.

In some cases — such as if you have federal student loans with competitive interest rates — refinancing your student loans may not be the best financial decision. Also, if you refinance from federal to private student loans, you could lose some of the potential benefits of federal loans, such as the Teacher Loan Forgiveness Program.

That said, if you’re paying high interest rates now or have some other challenges with your student loans, refinancing with one of these or other private lenders could save you money in the long run. Shop around and consider speaking with a trusted advisor to help you weigh your options.

Jake Safane contributed to this report.