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Refinancing Federal Student Loans 101: What It Means and How to Save Money

Kathryn Morstad
refinancing-federal-student-loans-how-to-save
refinancing-federal-student-loans-how-to-save

All through college, you have taken out federal student loans to bridge the gap in financing for your tuition and other expenses. It makes sense — they are easy to get, have great interest rates, and don’t require a credit check.

Now that you’ve graduated, you’re juggling multiple due dates, payment amounts, and repayment terms. How can you simplify and organize this sometimes overwhelming mound of paperwork?

That’s a question a lot of people are asking today. Student loan debt is at an all-time high that’s estimated to be about $1.56 trillion in 2020. With an average debt of $29,650, it’s no wonder that people are looking for solutions to harness their student loans and create something more manageable.

What is student loan refinancing?

In simple terms, refinancing is the process of working with a qualified lender to pay your existing loans in full and provide you with a single comprehensive loan for the total amount. You decide how many of your loans (including other private student loans) you want to include in this new refinanced loan.

Today, the refinancing process has been simplified by Purefy to bring together multiple lenders who compete for your business with you only needing to provide a few simple pieces of personal information.

Why refinance federal student loans?

Most people refinance because they are looking for cost savings as well as a more streamlined payment process. By refinancing federal student loans, you are often able to reduce your interest rate and chose more favorable repayment terms that meet your individual needs.

While you do need to have a good credit history and a stable income, there are no fees to generate a new loan.

Can you also refinance private student loans?

Absolutely. As long as you meet the credit requirements and the debt-to-income ratio parameters, private lenders will work with you to find the most advantageous loan program that puts both your federal and private student loans in one neat package.

As a gauge, most private lenders require a credit score in the high 600s at a minimum, with a debt-to-income ratio of 50% or less.

The 3 Best Companies to Refinance Student Loans

Our Top-Rated Picks for 2022 Offer Low Rates and No Fees

efli-lender
No Maximum Loan Amount

Fixed Rate

5.23% – 8.69% APR 4

Variable Rate

5.28% – 8.99% APR 4
98% of surveyed customers would recommend SoFi to a friend

Fixed Rate

4.49% – 8.99% APR 3

Variable Rate

5.09% – 8.99% APR 3
earnest-logo
Precision Pricing — Pick Your Monthly Payment

Fixed Rate

4.96% – 8.99% APR 2

Variable Rate

4.99% – 8.94% APR 2

Reasons to refinance student loans

  • Save money with a lower rate — By obtaining a lower interest rate on your loan, you can save significant money over the life of the loan.  For instance, for a $30,000 loan with a 10-year repayment schedule, the difference between 4% and 6% interest rate could save you over $5,000.
  • Shorten the repayment term — When you shorten your repayment term during the refinance process, you pay off that loan more quickly and free your finances up to pursue other goals like buying a home or taking that dream vacation.
  • Lengthen the repayment term — Maybe you are getting swallowed up by loan payments. By refinancing to a longer repayment term, you lower your monthly payment and give yourself some breathing room.  No one says you can’t change it later or double up on payments when you are able.
  • Choose fixed or variable rate — You have the ability to choose either a fixed rate, with one stable amount, or a variable rate, that tends to be lower in the beginning when you may just be starting out and need the break.
  • Add or drop a cosigner — Depending on your credit history, you may want a cosigner to guarantee your loan so that you can build your credit score.  Or you may have a cosigner currently but are at a place in your life where you want to relieve that person of the responsibility and build your own credit profile.
  • Combine and simplify payments — Refinancing allows you to consolidate all of your student loan amounts into one easy monthly payment with one due date to remember.

How to find your best student loan refinance options

The best way to find the refinance package that works for you is to shop around and compare rates. The problem is that process can be time consuming and confusing with information presented in a variety of forms that makes comparison difficult.

Purefy understands this problem and has created our rate comparison tool to guide you through the process.

At Purefy, we work with some lending industry lenders and have created a tool to help you determine the best loan package for you and your lifestyle. Our simple-to-use tool returns lender pre-approval offers in a format that is both easy to understand and comprehensive in its detail.

If you are trying to decide when to refinance student loans, remember that there are plenty of lenders out there ready to compete for your business. With a rate comparison, you can determine the best loan program for you without affecting your credit score.

When you use Purefy’s rate comparison tool, you have access to our thoroughly vetted lender team. We give you access to them all in one place and you don’t have to shop around to different websites where you need to fill out lengthy applications. 

You’re in a place to choose your own solution. Do you want to continue to struggle with the various federal student loans that you have accumulated over your academic career or consider a refinance option that gives you some freedom and control? If refinancing sounds like an idea that interests you, Purefy is here to provide answers.

Check out what our best lenders have to offer at Purefy and with a few simple easy-to-answer pieces of information, you can start to take charge of your financial future.

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Student Loan Refinance

Today’s Rates Starting From 4.49% APR

Take the guesswork out of shopping for a student loan refinance. Compare real prequalified offers from multiple top rated lenders in 2 minutes with no impact on your credit score.
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
efli-lender
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
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Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
ascent student loans

Before you go, let’s make sure is offering you the best rate.

It takes two minutes and has no impact on your credit score.

1

Answer a few questions with our easy & secure form.

2

Purefy checks for your prequalified rates from top lenders.

3

Pick your best rate and finish the application online in minutes.

Ascent Rate Disclosure

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 9/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

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.

ISL Rate Disclosure

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% 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 9.13% 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 9.21%. For loan terms over 15 years, the interest rate will never exceed 9.24%. 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.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination 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. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. 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. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

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 9/27/2023. 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.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 8/1/2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 9/13/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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