Are There Fees to Refinance Student Loans?

Kathryn Morstad

If you are considering refinancing your student loans, you may be worried — is there a fee to refinance student loans? No wonder! It seems like there is extraordinarily little in this world that doesn’t come with some kind of charge or cost.

It’s crazy that something complex like refinancing a loan would be cost-free.

At Purefy, there is never a fee to refinance your student loans through one of our top-rated lending partners.

Isn’t refinancing a student loan like refinancing a mortgage?

No, they’re quite different.

If you are refinancing a mortgage for a house or condo, you can expect to pay on average over $4,000. There will be an application fee ($235 on average), an origination fee (1% of the total loan amount), title searches and insurance ($400-$900), and so on. In most mortgage refinances, the fees are rolled into the principal of the loan increasing your total mortgage and costing you additional interest.

With student loan refinancing at Purefy, we only work with lenders that don’t charge fees for loans and don’t include prepayment penalties. We believe that if you want to pay your loan early, there shouldn’t be an added cost.

Are there hidden fees to compare student loan refinance rates?

If you were to refinance through your local bank or credit union, you may run into various fees, like application fees or a fee to run your credit report.

However, today’s student loan refinance industry is highly competitive, and you will find that most national lending companies don’t charge any initial fees to consolidate your federal and private loans.

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To be fair, there may be some hidden costs that you should at least be aware of, including:

  • Late Payment Penalties — Most companies will charge a late payment penalty if your payment isn’t postmarked by the due date, as well as a penalty on returned payments. At $35 per occurrence on average, they can really add up. If your payments are late due to an ongoing hardship or economic challenge, your lender may offer a hardship deference that usually lasts up to 12 months. It’s important to understand what that entails, and whether interest continues to accrue while the payments are on hold.

  • Increasing Interest Rates on Variable Rate Loans — Variable interest rates are lower than fixed rates which can be a very compelling selling point. In fact, today’s variable rates are around 1.9%-2.2%.

The downside, however, is these loans reset annually and can creep up by around 1% per year based on the economy and the prevailing interest rates being charged. Some even have a maximum of up to 25.00%. This represents a cost that you may not have anticipated over the life of the loan.

As long as the economy is being supported by the Central Bank (the Fed), rates will stay low. When the economy is heating up is when you will see the Fed increase interest rates to ward off inflation. This is when variable rate loans start to rise.

The good news is you can always refinance again at a later date and opt for a fixed rate loan. That’s also a good way to take advantage of the variable rate early on while it is low and then plan to refinance later to a fixed rate as your financial situation allows.

  • Origination Fees — While most companies charge $0 fees on refinancing student loans, they may charge fees on in-school loans. Be sure you compare both federal and private options if you are still in school and are looking at an initial loan. Federal direct loans have an origination fee that is 1.057% of the total loan amount and Parent PLUS direct loans have a fee of 4.228%. This fee amount is set by Congress and changes every academic year.

  • Loss of Federal Repayment Options — If you have signed up for any of the federal repayment programs, e.g., income-based repayment plans or public service loan forgiveness, then you may have been counting on 120 payments with loan forgiveness for any remaining balance. When you refinance, those benefits are withdrawn, and you are liable for the full balance due. Depending on how long you been in a federal program, you may find the financial impact of withdrawing from a federal repayment solution to be too costly.

  • Less Tax Benefit — You are eligible to deduct up to $2,500 in interest on your federal tax return. If your new rate drops you below that threshold for annual interest paid, you may not be receiving the full benefit of the tax write off. Arguably, with how much you save in interest on a refinanced student loan at a significantly lower rate, this point may be negligible. Note, as an ‘above the line’ deduction, student loan interest reduces adjusted gross income and is not an itemized deduction on Schedule A. That means you can take the deduction whether you itemize or us the Standard Deduction on your tax return.

  • Collection Fees — If you default on a student loan, you may be charged a fee by the lender for their costs to recoup their money. While most student loans are not eligible for bankruptcy, the collection process can add additional unforeseen fees to your loan.

Is there a cost to apply for a student loan refinance?

No, you pay $0 fees with a student loan refinance through Purefy. The lenders we work with never charge application fees or origination fees.

The market is extremely competitive for banks and credit unions that refinance student loans. They are anxious to do business with you and over the last few years application fees and origination fees have been reduced to zero as a way to incentivize people to actively pursue refinancing.

What you do need to have is a great overall financial persona, including:

  • A good to excellent credit score that demonstrates your ability to borrow and repay money in a responsible way. At a minimum, most lenders look at 650 to 670 as the floor for lending and the higher your score the better the interest rate you will be offered.

  • Good income that demonstrates longevity with a job or business venture (if self-employed). Lenders want to see that you are dependable, and they determine that partly through job longevity. They also use your income to determine your ability to pay.

  • A completed degree. Whether you have a bachelor’s degree or a graduate-level degree, you need to be able to demonstrate that you finished college before refinancing your student loans. However, there are a few lenders that offer refinancing for people who never graduated.

  • A solid debt-to-income ratio or DTI that takes your total monthly debt (e.g., mortgage or rent, credit card payments, car payment) and divides it by your gross monthly income. If you have a DTI below 38% to 40%, you are well positioned to refinance with a private lender. Like your credit score, the better the number (in this case, lower), the better the interest rate you will offered.

  • If you lack credit history or have a credit score that won’t allow you to refinance on your own, you can use a cosigner. Some of the companies that Purefy works with allow a cosigner release, which allows you to assume full responsibility for your student loans and releases your cosigner from further responsibility (usually around 12 months).

Free eBook: How to Conquer Student Loans

Free eBook: How to Conquer Student Loans

How much can you save by refinancing?

Not only are there no fees attached to the refinance process, but there is also money to be saved over the long term.

Depending on your current interest rate and loan terms, a new loan could save you on your monthly payment as well as on total interest. Consider these options with no-fee refinance loans:

  • You can score a better interest rate. If your loans were originated several years ago, you could be paying over 7 or 8% interest. With current interest rates at historic lows, your new loan could be 2.5 to 5% and even lower for a variable rate loan. Again, the better your credit score and the higher your income, the better your interest rate and the money you save overall.
  • You could choose fewer payments. If you want to pay off your loan sooner, you could choose a loan with 5 or 7 years where you could pay off the owed amount much faster than your current loan. The monthly payment may be higher, but you would save a ton in interest over the entire loan, plus redeploy that money to other financial goals once you have paid off the student debt.
  • You could choose a longer payment term. If your current student loan payments are overwhelming, you can extend the repayment term up to 20 years. This can make your monthly payment much more manageable, however, it will increase the amount of interest you end up paying long term.

Are there any prepayment fees or penalties on a refinance?

When you take out any type of loan, the lender you work with will often attach a clause in their contract allowing them to charge a prepayment penalty in the event you pay your debt off early. It’s a way for the lender to recoup some of the revenue lost when you stop making monthly interest payments.

Today, prepayment penalties have become rare in the student loan refinance industry although there are lenders who still stand by the practice.

At Purefy, we only work with lenders that forego prepayment penalties. If you want to save money by paying your student loan early, Purefy supports that and won’t ever quote loans with those types of fees or penalties.

See How Much You Can Save

Student Loan Refinance Calculator

View Details


Student loan refinancing combines your current loans into a single loan with a new rate and term. See how much you can save by entering your loan information below, or by getting quotes from multiple lenders using Purefy’s rate comparison tool.

Step 1: Enter Current Loan Information

Loan Balance
Your remaining student loan debt to be repaid.
Interest Rate
The amount that the lender charges in interest, expressed as a percentage.
Current Monthly Payment
The total amount of your monthly student loan bill.
Add Multiple Loans to Calculate

Step 2: Enter New Loan Information

New Interest Rate
Your updated interest rate after refinancing student loans.
The length of time you have to repay your student loan debt in full.

Add Multiple Loans

Insert additional loan

Step 3: See How Much You Can Save


Lifetime Interest


New Monthly



Current Loan New Loan Savings
Rate 6.7% 4.2% 2.5%
Lifetime Interest $37,520 $22,210 $15,310
Monthly Payment $1,146 $1,018 $128

Like what you see? Check your actual prequalified rates from the industry’s top lenders in just 2 minutes or less.

How does Purefy make money?

Our business model is based on providing outstanding service to our site users through simple, fast, and accurate lending quotes, state-of-the-art security and encryption, and excellent customer service.

Launched in 2014, Purefy offers a time-saving way for you to find the best rates available based on your specific information.

We are committed to providing a transparent, free service that matches qualified people interested in refinancing their student loan debt with industry-leading lenders with the top ratings. Once an application has been approved and there is a newly established business relationship, Purefy is compensated for the introduction or referral.

Should I refinance my student loans through Purefy?

There are a number of comparison sites available today — each with the ability to support you in your refinancing journey. So, besides no fees, what sets Purefy apart?

  • Top-Tier Lenders — We offer the best lenders in the business. They have been fully vetted and offer loan products that have no fees and no prepayment penalties. Purefy goes through an incredibly careful process when selecting the lenders that join our team. We look for reputation, flexible repayment terms, innovative products, transparency, forbearance options, and financial strength.

  • Purefy has developed a state-of-the-art, secure Rate Comparison Tool that operates with some simple information and returns prequalified offers in less than two minutes.

  • Purefy was awarded NerdWallet’s 2021Best-of Award for Best Student Loan Refinancing Overall winning from a field of 34 banks, credit unions, or online lenders that specialize in student loan refinancing.

  • We have an industry-leading student loan consultation service that features our world-class student loan advisors. Purefy’s advisors are available for scheduled appointments, or you can just give them a call. They can answer all your questions, guide you through the application process, or just help you compare rates. Our expert loan advisors are a part of why we won Best Student Loan Refinancing Overall from NerdWallet’s 2021 Best-of Awards. Talk to one today and get the support you want.

  • Full resource library of calculators that allow you to quickly and easily calculate everything from your debt-to-income ratio to payoff amounts for both student and Parent PLUS loans. Have an unexpected windfall? Try the Lump Sum Extra Payment Calculator to see how it would affect your ultimate pay off.

  • A complete library of resources to research or answer any of your questions on student loan refinancing and Parent PLUS loan refinancing. From ‘How-to’ Guides to articles on current happenings in the student loan industry, see how you compare to other people currently considering refinancing student loans.

Refinancing is a big decision, and you want to be sure that you get the best interest rate available. Trust Purefy to find you the best lender for your refinanced loan and use the tools available to help illuminate the entire process. Check our college loan refinance calculator to see how much your savings would be.

How do I select the best lender for me?

That’s a good question! There are a lot of lenders out there today and it is very competitive. With Purefy, you can trust that you are looking at quotes from the most reputable and trustworthy lenders in the marketplace. So, let’s talk about where to begin.

First, you want to determine your goals and overall financial outlook. Consider these points when you look at refinancing your student loans:

  • What is your primary goal with refinancing your student loans? Do you want to save money on interest each month and over the entire life of the loan? Or do you want a more manageable monthly payment that allows you to do more things?

How you structure your new refinanced student loan will determine these things.

  • Are you looking to have more money available for future financial goals? You may have been postponing getting married or buying a house and want to free up your liquid assets. In that case, you want to pursue paying your loans off early.

Next, collect your personal information, including:

  • Student loan information including statements that show your current balances, interest rates, and years left to repay the loan.

  • Paystubs (if you’re employed) or tax returns (if you own a business or are an independent contractor).

  • Education information such as what school you attended when you graduated, degree conferred, etc.

Now you’re ready and armed with the right information — let’s go!

How do I find my lowest refinance rate offer?

Purefy has been committed to helping people restructure their loan debt with no cost to refinance student loans since 2014. In that time, Purefy has developed a process and support system that fully engages you as the potential debtor.

The first step is to take advantage of their state-of-the-art Comparison Rate Tool. To do that, simply fill in some personal information, including:

  • Your demographic information like your name, address, email address
  • The school you attended, degree earned, and when you graduated
  • Your income and the money you have saved
  • If you rent or own your home
  • The amount you want to refinance
  • It will ask for a social security number to pull a soft credit report but remember your personal information is fully encrypted and a soft report won’t affect your credit score.

You will receive a quote report showing you prequalified offers from up to four different lenders. These offers will include fixed and variable (if offered) rates, term options, and any special offers or deals that the lender may have. What you won’t see is a cost to refinance student loans.

Reviewing your quote and selecting a lender

From here, you should have the information you need in a sortable format. You can take time to review your options and select the best lender for you based on valid offers, not estimates or ‘introductory’ rates.

Once you have selected the lender you would like to work with, you are ready to fill out and submit an application. This is where the lender will ask for a bit more detail in terms of your financial situation and any money owed. They will also pull a hard credit report before making a final decision.

At any point, Purefy’s expert student loan advisors are available to answer questions, explain details, or just walk you through the entire process. All you have to do is set up an appointment for a consultation, and you have your own personal advisor who’s knowledgeable and understands the complexities of financing and loans.

Upon receiving approval, the process moves seamlessly. Your new lender will pay off your current loans and notify you of your new obligations. It’s important to keep paying your existing loans until you receive word that they are paid in full. You don’t want to jeopardize your credit history by missing a payment.

To sum up

You shouldn’t have to pay fees or penalties when refinancing your student loans, nor should you have to worry about hidden fees down the road.

Today’s student loan refinance market is competitive. All you have to do is search the internet and you find what seems like an endless list of potential student loan refinance lenders. It’s difficult to know who to approach and what to expect.

You want to work with a lender that has a reputation for trustworthiness and reliability, as well as a lender with the financial strength to offer the best interest rates and terms.

At Purefy, you receive actionable prequalified quotes from lenders who don’t charge origination or application fees and who never have a pre-payment penalty. You also can count on the fact that each lender is fully vetted and is a leader in their industry. Try the Purefy Comparison Rate Tool today and see how easy it is to make the best student loan refinance decisions with no hidden costs.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.72% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.39% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

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ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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