5 Things To Consider When Refinancing Student Loans

refinance student loans

So you want to refinance federal student loans, Parent PLUS Loan and/or private student loans? There are a lot of options for student loan refinance and Parent PLUS refinance and a lot of confusing information. So, let’s cut through all the red tape and break down student loan refinance (also known as private student loan consolidation) and Parent PLUS Loan refinance into 5 key components that you should consider to help drive your decision.

1. Interest Rate: Should I Choose A Fixed Interest Rate or Variable Interest Rate?

Your interest rate is one of the most important factors for your consideration with private student loan consolidation. When considering an interest rate, though, don’t just choose the lowest interest rate. Why? Variable interest rates are typically lower than fixed interest rates. If you are paying off your student loan in five years, for example, you may be better off taking the lower rate variable interest rate.

However, if you are paying off your loan over a longer term such as 20 years, then a fixed rate may be a better option. This is because variable rates will change as interest rates change. When interest rates go up, your variable interest rate will increase. When interest rates go down, your variable interest rate will decrease. With a fixed interest rate, your rate will never change (for better or worse) – regardless of movements in interest rates.

  • Doctor’s Order: Choosing an interest rate is a personal decision based on your personal and life goals. Don’t just choose the lowest interest rate. Think about your loan term and when you can and want to pay off your student loans. The sooner you pay off your student loans, the more you save in interest!

2. Loan Term: How Long Or Short Should My Loan Term Be?

When deciding a loan term, you should remember a simple rule: the shorter your loan term, the higher your monthly payment; the longer your loan term, the lower your monthly payment. You should consider choosing a loan term that matches your personal and financial goals, and decide whether you can afford to pay off your loan as quickly as possible.

  • Doctor’s Order: The sooner you can pay off your loan, the less interest you have to pay. Think of it this way: each day you can pay off your loan faster is one day of interest saved that can be used to invest. That’s extra money in your pocket to save for a down payment, medical bills, a car payment, or a vacation.

3. Loan Amount: How Much Student Loan Debt Can I Borrow?

Loan amount, or the amount that you borrow, is directly connected to your monthly interest payment. If you have medical school or pharmacy education loans, you may have a higher student loan balance. But that’s perfectly fine. Some student loan companies will allow you to borrow up to $500,000 and some lenders do not even have a maximum loan amount

  • Doctor’s Order: Medical school and pharmacy school student loan borrowers are viewed favorably by many private student loan companies because they are viewed as stable, high income earners who can repay their student loans in full and have low default rates.

4. Do I Need A Co-Signer?

When you apply to consolidate and refinance your student loan, the lender will evaluate your financial profile, including your financial responsibility as well as income and expenses, and other criteria that may include your credit history and/or credit score.

If the lender decides you do not qualify for one of their loans based on their underwriting criteria, they may ask that you have a co-signer, which may be a family member, for example, that will assume financial responsibility for the loan if you are unable to pay. The co-signer would have to meet the lender’s underwriting criteria, so it best to put forth a co-signer who has a strong credit profile. Some student loan lenders offer “co-signer release,” which means that once you are approved, the lender will release the co-signer from having any financial responsibility for your loan. 

5. Can I Expect Stellar Customer Service?

It doesn’t have to be a headache to refinance student loans. While there is a lot of information out there that often times can seem confusing and complex, the last thing you need is a student loan lender with poor customer service. The lender you choose should be available to answer all your questions (from student loan forgiveness to student loan repayment to student loan consolidation to student loan refinance), be responsive, and be patient.


Want to save money on your student loans? These lenders represent our top student loan refinancing picks for 2017, and may be able to help you save thousands of dollars on your student loans by offering lower interest rates and lower monthly payments. That’s real money back in your pocket.

Learn your new student loan interest rate in a matter of minutes.

Student Loan Refinancing – Best of the Best

LenderRates (APR)Loan Terms (Years)Get Your RateLearn More
2.75% - 7.35%5 – 152 minutesSTART SAVING
2.21% - 8.97%5, 10, 15, 202 minutesSTART SAVING
3.89% - 7.45%5, 7, 10, 15, 202 minutesSTART SAVING

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