Why Tax Season Is a Smart Time to Check Student Loan Refinance Rates

Sara Cantu

Truth be told, there isn’t a whole lot to love about tax season. Every year, millions of taxpayers scramble to get their financial statements in order before that looming deadline. And while crunching numbers and scouring for receipts can cause a headache, tax season does allow for some financial introspection. With a clear view of what you spend and what you earn, you can begin drawing a roadmap for how to approach your finances in the coming year.

The world of taxes can be complicated, and unless you are an accountant or tax specialist, it may be difficult to gauge the many ways in which you can save.

For instance, did you know your student loan debt can impact your tax return? You may qualify for a student loan interest deduction, which can help reduce your tax bill. However, it’s important to first consult with your accountant or other financial professional to determine if student loan interest deduction is a suitable route for you.

How to claim student loans on taxes

Tax season takes place near the start of the year, which is a good time to get a clear picture of your current finances. This bird’s eye view of things like your income and expenses allows you to take a closer look at your discretionary spending. Doing this can help you more easily identify ways in which you can cut back and re-allocate some of your income in a way that makes sense for your unique financial goals.

And while student debt repayment can be a cause of stress for so many, it’s not all bad news. If you’ve been paying interest on your student loans, you may be eligible for tax deductions of up to $2,500. In fact, when searching how to claim student loans on taxes, you can do so as a straight adjustment to your income. To do this, you’ll need to fill out an IRS Form 1098-E, which you’ll submit when you file your taxes.

Claiming student loan interest on taxes isn’t new. If you’re not quite sure whether or not you qualify for a student loan interest deduction, don’t fret. The IRS has an online interview portal to help you determine if you are eligible.

Things to consider when claiming student loan deductions

Not only can qualifying for student loan deductions help lower your tax bill, but you may see a boost in your tax refund, as well. However, keep in mind that there are stipulations when claiming student loan interest on taxes. For example, the more you earn, the less student loan interest you’ll be able to write off. If you are earning over $70K per year, you may not even qualify for this type of deduction. If you find yourself in this situation, you can take comfort in the fact that there are other ways to save on your student loans outside of claiming student loan interest on taxes.

Refinancing your student loans may be a wise financial move, depending on the type of rate you can secure. Checking refinancing rates and keeping an eye out for the best offers on interest can help you save big money over the remaining course of your loan.

Now is a great time to explore student loan refinancing as a means of saving money on your taxes. Rates are currently at near historic lows, which can unlock the door to better financial opportunities in the future.

Why refinance student loans?

There are plenty of reasons student loan refinancing may be a good idea. Whether you want to save more money, reduce your monthly payments, or shorten your repayment term altogether, your unique financial situation will dictate whether refinancing is worth the effort. In many cases, it is.

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Save money on interest

One of the most popular perks of student loan refinancing is saving money, of course. If you have good credit, you can qualify for lower student loan rates than you currently have. This allows you to save money month-to-month, but also provides big time interest savings over the life of your loan.

Lower monthly payments

It’s possible that your student loan payments are eating away at your income. If you find yourself in a difficult situation where juggling bills has become hard to manage, it’s time to explore ways to cut back. By lengthening your repayment term, you can lower your monthly student loan payments and begin allocating those funds to savings or other important expenses. This is one of the many perks you’ll find in refinancing.

Shorter repayment terms

Contrary to popular belief, there may come a time where you want to actually pay more on your monthly bill. You might choose to do this if you are making more money than anticipated and can afford to pay more toward your debt, or are hoping to clear your debt more quickly. By shortening your repayment term, you’ll pay off your student loans faster and save money on interest in the process.

How to compare student loan refinance rates

There are plenty of ways to save through refinancing. You can kick off the process by doing research on different lenders and evaluating how their rates can impact your debt repayment.

Speed up and simplify the research process with Purefy’s Compare Rates tool. In under 2 minutes, you can fill out some basic information to get a side-by-side comparison of our top partner lenders to help you determine which has the best offer for you.

Now is an excellent time to explore what student loan refinancing can do for you. Fixed refinance rates have reached historic lows, allowing you to pay less in interest and therefore save more money over time. And if you’re not sure where to begin on your refinancing journey, consider starting with our marketplace of the best lenders.

Keeping well informed about current interest rates can help you determine exactly when to refinance. Even small fluctuations, such as 1-2%, can make an impact on how much your loans cost in the long run.

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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 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.64% 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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