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Home » How to Refinance Your Student Loans and Save Thousands!

How to Refinance Your Student Loans and Save Thousands!


  • Originally written on 4/14/2022 for KennethVincent.com
  • Migrated on 9/14/2023

Intro

So, you want to refinance your student loans. That’s great! No one likes making their student loan payments month after month. So let’s do something about it.

Why you should refinance your student loans ASAP

With interest rates at historic lows, now is the best time in recent history to refinance your student loans. Plus, with education costs at historic highs, it probably wouldn’t hurt to refi and pay less in interest. The best benefit is you’re likely to get out of debt faster. 

Why you might not want to refinance a student loan

If you have federal student loans. They offer serious forgiveness and flexibility options. When you refinance, you may lose some or all of these perks. You might lose the ability to stop payments if you lose a job or the ability to adjust how large your monthly payment is based on your income. 

Two ways to refinance 

Way #1 the Concierge Approach

If you want the white glove concierge approach remember that all student loan guidance is free. There are entire organizations dedicated to helping you sort out your individual student loan plan and answering all your questions. 

Do you have 1 million questions and don’t know what you’re doing? Or do you want someone to hold your hand all the way through the process? 

Either way, companies exist that will gladly walk you through the process to refinance a student loan. So if you want a little help? Go for it, there’s no reason not to, it’s free and the people are wonderful. 

If you have questions about student loan forgiveness or other programs this is the way to go as well. T1he consultants are knowledgeable about all sorts of programs and they can help you find out what type of aid or forgiveness your loans and work are eligible for. 

Way #2 The DIY

If your loans and work are all pretty straightforward you may want to do it yourself. Straightforward work here means that you don’t work for a nonprofit, work for a government organization, service a rural area, or otherwise qualify for forgiveness programs. While a straightforward loan means that you don’t necessarily mind losing out on some delayed payment benefits, deferrals, income-based payment plans, etc… that you would get from keeping a federal student loan. 

It would help if you know some basic math and can figure out that paying 3% interest to someone is better than paying 7%. Grab that lower interest rate and save yourself a lot of money.

As a bonus I’ve got a link further down that will help support this blog and pay you $200 to refinance your loans with Earnest. That’ll cover some interest! (And if you put that toward the loan payment as principal it’s worth even more)

Honestly, I’d do both. And did do both. Talk to the experts at GradFin they’re super helpful. Then if you’re gonna refi instead of waiting it out for loan forgiveness come back here click the link and get those two hundred bucks. Doesn’t hurt right?

Get a Free Consultation

As a financial advisor, one of my favorite services was scheduling free student loan consultations for my clients with GradFinGradFin is a non-commission student loan information hotline. It never cost me or my clients anything, and it helped my clients out tremendously. The service representatives have always been incredibly knowledgeable and helpful. Don’t settle for less, start with GradFin.Schedule your free consultation with GradFin today!

Am I Eligible to Refinance my Student Loans?

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Here are the most common requirements. Some of these can be more or less stringent depending on the lender you’ve chosen to refinance with and the state you live in. 

  • Credit Score above 650
  • Debt to Income Ratio Under 50% (Under 20% is better)
  • A steady job or consitant income
  • At least $5,000 in student loans to refinance (More depending on the state)
  • Graduated (In some cases graduated from a Title IV accreddited colege)
  • Your loans aren’t currently in default

Some lenders may have their own requirements in addition to these. Some common ones are:

  • US Citizenship
  • The loans must have come from a US based college
  • No bankruptcies
  • Current payments on your mortgage, rent, credit cards, etc…
  • The less overdraft charges and fees the better
  • The less other debt the better. Motgages, presonal loans, credit cards etc…

These are all ways the refinancing companies are trying to make sure you can actually pay back the student loans. If they don’t feel sure enough that you can pay them back they might not want to take that risk. 

If you want to make yourself look great for a potential lender check out my checklist here. (Coming Soon)

Get a Quote

After the consultation, follow their next steps. Go online, fill out some forms, and get a quote from a new student loan provider. We went with Earnest. This is only a quote so there’s no need for a hard credit pull. 

They will ask for some basic personal information. And, of course, information from your current student loan. 

Here’s what they’ll ask:

  • Name
  • Email Address
  • Citizenship Status
  • Highest Completed Degree
  • Graduation Date
  • School
  • Aproximate Student Loan Amount
  • Anual Income
  • Savings = Cash + Retirment + Investment
  • Rent or Mortgage Payment
  • Street Address
  • Create a Password
  • Social Security Number

Get your free, no-obligation, Student Loan Refi quote from Earnest in 2 minutes now! 

Do The Math

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Now that you are armed with a quote the next step is to do some math to discover exactly how much you could save. I’ve provided a free downloadable excel workbook to make this step easier. 

You can download it below or go to my downloads page for more free goodies. Student-Loan-Refinancing-CalculatorDownload

I breakdown how to use the workbook here. 

Get Approved

Once you’ve determined if these quotes will work for your budget, and timeline, and will actually save you money, it’s time to get approved. They will likely need to perform a hard credit pull at this point. Be prepared for that and don’t let it scare you away. 

After the hard credit pull our rates dropped so that our final offer was even better than the quote! Accept the student loan refi offer online and continue through their process.

Finalize

Now that you’ve accepted everything it’s time to set the student-loan-refinance wheels in motion. You can do this by providing information about your current student loan to the new provider. 

Here’s what they needed from me:

  • Pay Off Amount (Your current loan provider will display this option under the payments tab)
  • Student Loan ID#: This number is displayed in parenthases right next to each loan.

The new provider is going to pay off your student loan in full and then you will start making payments to them. To do this, they need more details about who to pay and when. 

One of the more difficult parts for us to figure out was where to find the information needed on My Great Lakes. Google quickly became our best friend. Additionally, both the refinancing site and the current loan provider will offer instructions on where to find the necessary information. 

Keep Making Payments While you Wait

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Now that the new provider knows to pay off the old provider it’ll take some time for this whole process to unfold. You can mostly sit back while this happens and wait it out happily. 

It confused me at first, but you can and should continue to make payments on your student loan while it is being transferred over to your new lender. If you’re wondering what happens to your payments on your old loan while in the transfer process, click over to my other article. 

Celebrate!

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Now go out and get yourself a high five! You’re saving money and might even get out of debt early. Don’t wait until you’ve forgotten. Get started with your free quote and get $200 back when you refinance today! 


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