Refinancing used to be a fairly simple calculation: if a private lender would give you a lower rate than your federal loans, and you didn’t expect to need forgiveness, you refinanced and pocketed the savings. That math still works for some people. But the federal side of the equation moved a lot this year. The SAVE plan is gone, a new Repayment Assistance Plan replaced it, Grad PLUS loans closed to new borrowers, forgiveness through income-driven plans became federally taxable again, and the courts struck down a rule that would have shrunk Public Service Loan Forgiveness.
Each of those changes shifts who should refinance and who should hold on to their federal loans. This guide walks through the decision in the order that actually matters: what you give up, whether a private lender will really beat your rate, which lenders to price, and the specific situations where the answer flips, from the surgeon finishing residency to the parent with Parent PLUS loans to the teacher counting PSLF payments.
Ten Questions Answered Before You Fill Out a Single Form
These are the worries we hear most from borrowers weighing a refinance. Short answers here; the details, and the exceptions, are further down.
No. Federal Direct Consolidation combines federal loans into one federal loan at a weighted average of your old rates, rounded up slightly. It doesn’t lower your rate. Refinancing replaces your loans with a new private loan at a new rate.
No. Once a private lender pays off a federal loan, you can’t move the debt back into the federal system. That one-way door is the main reason to be cautious with federal loans.
Almost never. PSLF forgives the remaining federal balance tax-free after 120 qualifying payments. A June court decision vacated the rule that would have excluded some employers, and the government has since dropped two of its three appeals.
Lenders advertise fixed floors near 4%, but recent averages for a 10-year fixed refinance were about 5.9% for scores of 780 and up, 6.5% for 720–779 and 7.2% for 680–719. Below 680, averages jump above 9%.
Graduate and PLUS borrowers with strong credit and high, stable income. New federal grad loans carry 8.07% and PLUS loans 9.07%, which leaves real room for a private rate to beat them.
Not at pre-qualification. Lenders such as SoFi use a soft pull to show your rate; only the full application triggers a hard inquiry.
Not federally. The temporary exemption expired, so forgiveness under income-driven plans can count as taxable income again starting this year. PSLF stays tax-free, and death and disability discharges are now permanently excluded.
No. Parent PLUS loans, and consolidation loans that include them, aren’t eligible for RAP. That makes refinancing, including into the student’s name at lenders that allow it, a more common choice for parents.
Fixed for most people. A variable rate only makes sense if you’ll pay the loan off within a few years and could absorb a higher payment if rates rise.
Yes. A refinanced student loan still counts as a qualified education loan, so you can deduct up to $2,500 of interest a year if your income is under the limit.
What Changed This Year, and Why It Matters for Refinancing
Most refinancing guides online were written before the federal overhaul passed in last summer’s reconciliation law took full effect. Here is what is different now.
RAP launched July 1. Instead of a share of “discretionary” income, it charges 1% to 10% of your adjusted gross income, rising one point for each $10,000 bracket, with a $10 minimum and $50 off the monthly payment for each dependent. If you pay on time, unpaid monthly interest is waived, and if your payment doesn’t reduce principal by at least $50, the government matches up to $50 of principal. Any balance left after 360 qualifying payments is forgiven.
Loans first taken out on or after July 1 can only use RAP or a standard plan. Older loans can still choose Income-Based Repayment or RAP. PAYE and ICR close on July 1, 2028.
Grad PLUS closed to new borrowers on July 1. Students already enrolled who got a disbursement before then can keep borrowing for up to three more academic years in the same program. New graduate limits are $20,500 a year and $100,000 in total, or $50,000 a year and $200,000 in total for professional programs such as medicine, law and dentistry, within a $257,500 lifetime cap. Parent PLUS is now limited to $20,000 a year and $65,000 per student.
For refinancing, the practical effect is that more graduate students will carry private loans alongside federal ones, and private loans are always fair game to refinance.
A final rule would have let the Education Department exclude employers it judged to have a “substantial illegal purpose.” Federal courts vacated it on June 30, the day before it was to take effect. On October 21 the Justice Department dropped two of its three appeals, and the remaining states’ appeal has a government brief due in early November. For now, PSLF employer eligibility works as it did before.
Refinancing vs. Federal Consolidation, Side by Side
The words get used interchangeably in ads, and the mix-up costs people money. They’re different products with different purposes.
| Feature | Private refinance | Federal Direct Consolidation |
|---|---|---|
| Who offers it | Banks, credit unions, online and nonprofit lenders | U.S. Department of Education |
| New interest rate | Based on your credit; can be lower | Weighted average of old rates, rounded up to the nearest 1/8 point |
| Credit check | Yes, soft then hard | No |
| Private loans allowed | Yes | No |
| Keeps PSLF and IDR | No | Yes |
| Cost to apply | Free | Free at studentaid.gov |
| Main reason to use it | Lower rate, drop a cosigner | Simplify federal loans, regain eligibility, exit default |
Consolidation is a tool for organizing and protecting federal loans, not for saving on interest. Be careful with it too: consolidating loans that already have qualifying PSLF or IDR payments can affect your count, and including a Parent PLUS loan in a consolidation makes the whole new loan ineligible for RAP. Use the Loan Simulator on studentaid.gov to preview the effect before you submit.
What You Give Up When You Refinance Federal Loans
This is the part to get right before anything else, because it can’t be reversed.
SoFi’s own disclosure spells it out plainly: refinancing federal loans means forfeiting PSLF and income-driven repayment, and you may pay more interest over the life of the loan if you choose a longer term. Every lender says something similar. The question isn’t whether you lose these protections; you do. It’s whether you realistically would have used them.
A useful test: imagine your income drops by a third for a year. With federal loans on RAP, your payment would fall with it, possibly to $10. With a private loan, your payment stays the same, and the best you can usually hope for is a few months of forbearance at the lender’s discretion. If that scenario would be a crisis, keep at least some of your loans federal.
How RAP compares with a refinanced payment
RAP payments are set by income, not by what you owe. That’s why it protects low earners with big balances and does little for high earners with modest ones. A single borrower earning $150,000 owes about $1,250 a month on RAP regardless of balance. If that borrower owes $60,000, a 10-year refinance at around 6% would cost far less each month and finish in a decade. If they owe $300,000, RAP could look very different. Run both numbers with your own figures on studentaid.gov’s Loan Simulator before deciding.
Will Refinancing Actually Lower Your Rate?
Advertised floors sit near 4%, but your rate depends far more on your credit score than on the lender. Here is how typical offers compare with what you pay now.
When we lined up the numbers, one pattern stood out. A borrower with a 720-plus score refinancing graduate or PLUS loans has a real margin to work with: averages in the 5.9% to 6.5% range against federal rates of 8.07% and 9.07%. An undergraduate borrower with the same score has almost no margin against the current 6.52% federal rate, and borrowers below 680 would usually pay more by refinancing. Older federal loans vary: undergraduate loans from the low-rate years around 2020 and 2021 carry rates under 4%, and refinancing those rarely makes sense.
Look up the exact rate on each of your federal loans at studentaid.gov before you compare. Your servicer’s statement shows a weighted average, which can hide one or two expensive loans worth refinancing on their own.
You don’t have to move everything. A common strategy is to refinance the highest-rate loans, usually Grad PLUS or private loans, and keep lower-rate federal loans on an income-driven plan as a safety net. Most lenders let you choose which loans to include.
Student Loan Refinance Lenders Compared
Advertised ranges reported in October. Lenders update rates often, and several publish slightly different numbers in different places, so treat these as a guide to who is worth a soft-pull check.
| Lender | Fixed APR | Variable APR | Terms (years) | Min. credit | Worth knowing |
|---|---|---|---|---|---|
| MEFA | 3.95%–8.95% | Not offered | 7, 10, 15 | 670 | State-affiliated nonprofit; check eligibility |
| Brazos | 3.99%–6.74% | 3.96%–6.61% | 5–20 | 720 | Narrow, low range; check eligibility |
| SoFi | 3.99%–10.49% | 5.24%–10.49% | 5–20 | Not disclosed | No degree required; parent loans to child |
| RISLA | 3.99%–8.99% | Not offered | 5, 10, 15 | 680 | Nonprofit; no degree required |
| EdvestinU | 4.15%–9.06% | Not offered | 5–20 | 700 | Nonprofit-affiliated |
| Earnest | 4.20%–9.99% | 5.88%–9.99% | 5–20 | 665 | Won’t move parent loans to the child |
| LendKey | 4.28%–9.24% | 4.34%–9.39% | 5–15 | 680 | Marketplace of credit unions |
| ELFI | 4.29%–9.19% | 4.74%–9.44% | 5–20 | 680 | Bachelor’s degree required; parent loans to child |
| Splash | 4.29%–11.37% | 4.74%–11.37% | Varies | Varies | Marketplace of partner lenders |
| Citizens | 6.04%–10.65% | 6.18%–11.01% | 5–20 | Not disclosed | Bachelor’s degree required |
Several lenders above are state-based or nonprofit organizations, and some limit eligibility by where you live or went to school. Marketplaces such as Credible and LendKey show offers from several lenders at once. SoFi is running a 0.50% rate drop on refinance applications started October 19 through October 25.
Look for no origination or prepayment fees, an autopay discount (usually 0.25 points), a cap on variable rates, death and disability discharge, forbearance or unemployment protection terms, cosigner release rules, and the ability to choose which loans to include. Laurel Road, now part of KeyBank, caps variable rates at 15% and applies its 0.25% autopay discount; it also runs a refinance program for parents.
What Refinance Lenders Check
Approval standards are tighter than for most personal loans, because lenders are taking on large balances for long terms.
- Credit score. Published minimums among the lenders above range from 665 at Earnest to 720 at Brazos, and most lenders look for the mid- to high 600s or better. The best rates go to scores around 780 and up.
- Income and job stability. A steady salary in your field carries a lot of weight. A signed offer letter can count for new graduates at some lenders.
- Debt-to-income ratio. Lenders compare your monthly debts, including the new loan payment, with your income. A large balance relative to income can mean a decline even with a strong score.
- Degree and school. Some lenders require a bachelor’s degree from an eligible school; others refinance loans for borrowers who didn’t finish.
- Loan status. Loans must be in repayment or close to it, and in good standing.
- Citizenship or residency. Most lenders require U.S. citizenship or permanent residency; a cosigner who is a citizen can sometimes help others qualify.
Add a creditworthy cosigner, choose a shorter term, set up autopay, pay down a credit card before applying to lower your utilization, and correct any errors on your credit report. Each of these can move you into a lower pricing tier.
How to Refinance Student Loans, Step by Step
The process usually takes two to four weeks from first rate check to payoff. Most of that is waiting for your old servicer to process the payoff.
1. Make a list of every loan
Log in to studentaid.gov for federal loans and check your credit report for private ones. For each loan, write down the servicer, the balance, the interest rate, whether it’s federal or private, and for federal loans, how many qualifying payments you’ve made toward PSLF or IDR forgiveness. That last number can change your decision on its own.
2. Decide which loans to include
Private loans and high-rate federal loans are the usual candidates. Leave out any federal loans you’re counting toward forgiveness, and think twice about loans you might need to put on an income-driven plan if your job changes.
3. Check your credit and income documents
Lenders look at your credit score, debt-to-income ratio, income stability and, at some lenders, your degree. Pull your reports at AnnualCreditReport.com and fix errors first. Have recent pay stubs or an offer letter ready; some lenders, like Laurel Road, let borrowers apply in their final semester with a signed employment contract.
4. Pre-qualify with three to five lenders in the same week
Mix a large online lender, a nonprofit or state-based lender you’re eligible for, and a marketplace. Pre-qualification uses a soft pull. Ask each for the same term so you can compare like with like.
5. Choose the term with your eyes open
The 20-year option cuts the payment by more than half compared with five years, but costs about six times as much interest in this example. If you need a lower payment now, choose a middle term and prepay when you can. Refinance lenders generally don’t charge prepayment penalties, but confirm it in your loan agreement.
6. Submit the full application and upload documents
This step triggers a hard credit check. You’ll typically upload ID, proof of income, proof of graduation if required, and a recent statement for each loan being paid off showing the account number and servicer address.
7. Sign, then keep paying until the payoff posts
The new lender pays your old servicers directly. That can take a couple of weeks, and a missed payment in the meantime can still hurt your credit. Keep making payments until each old loan shows a zero balance, then confirm any small overpayment is refunded.
8. Set up autopay and check your first statement
Enroll in autopay for the discount, confirm the rate and term on your first bill match the agreement, and save the payoff letters from your old servicers.
A Worked Example: What a Refinance Saves in Dollars
A hypothetical borrower with $80,000 in graduate and PLUS loans at a blended 8.4% rate, comparing 10-year options. Our amortization math.
| Scenario | Rate | Monthly payment | Total interest | Saved vs. keeping |
|---|---|---|---|---|
| Keep federal loans, 10-year standard | 8.40% | $988 | $38,513 | — |
| Refinance, 680–719 credit | 7.16% | $935 | $32,257 | About $6,260 |
| Refinance, 720–779 credit | 6.53% | $910 | $29,153 | About $9,360 |
| Refinance, 780+ credit | 5.87% | $883 | $25,954 | About $12,560 |
Notice how modest the monthly change is: $50 to $100. The savings come from the total over ten years. That’s why refinancing rewards people who will pay the loan in full, and why it’s a poor trade for anyone with a realistic shot at forgiveness, where the federal government would cover the remaining balance.
Which Situation Sounds Like Yours?
The same loan balance can call for opposite decisions depending on your job, your income path and who signed the loan.
This is the easiest case. Private loans have no federal protections to lose, so refinance whenever you can get a lower rate or drop a cosigner. If your credit has improved since you borrowed in school, the difference can be large. Check whether your current lender has a prepayment penalty; most don’t.
Doctors, dentists, lawyers and engineers with stable private-sector income are the classic refinance candidates, especially with PLUS loans near 9%. Before you refinance, confirm you won’t work for a nonprofit hospital or government employer, since that would put PSLF back on the table. Many lenders have programs for physicians and dentists; ask how they handle residency or fellowship payments.
Keep your federal loans and stay on a qualifying income-driven plan. PSLF forgiveness after 120 payments is tax-free, and the court ruling this summer means the employer rules haven’t narrowed. Refinancing even part of your PSLF-eligible debt resets that portion’s progress to zero, permanently. If you have private loans too, refinance those separately.
Compare three numbers before your notice deadline: your RAP payment, your IBR payment, and a refinance offer. If your income is modest, RAP’s interest waiver and $10 floor may beat any private loan. If your income is high and stable and you weren’t pursuing forgiveness, refinancing may cut your total cost. Don’t let the deadline pass without choosing, or you’ll be placed on a standard plan by default.
Your federal options are thin: Parent PLUS isn’t eligible for RAP, and new Parent PLUS loans are limited to standard repayment. Refinancing in your own name can lower the rate. Some lenders, including SoFi, ELFI and PenFed, let the student refinance the parent’s loan into their own name if they qualify, and Laurel Road runs a parent refinance program. Earnest doesn’t allow the transfer. Moving the loan to your child is irreversible and makes them fully responsible.
Refinancing in your name alone is often the fastest way to free a parent or relative from a private loan. You’ll need enough income and credit to qualify solo. If you can’t yet, ask your current lender about its cosigner release rules, which usually require a run of on-time payments.
Lenders will want two years of tax returns, and they underwrite on net income. More importantly, a fixed private payment is unforgiving when a slow quarter hits. Consider refinancing only your private loans and keeping federal loans on an income-driven plan as a cushion.
Private lenders generally won’t refinance loans in default, and recent missed payments will hurt your offer. Federal options come first: rehabilitation or consolidation can bring a defaulted federal loan current. The New York Fed has noted that the return of defaulted student debt to credit reports is distorting delinquency statistics, a reminder of how visible these problems now are to other lenders.
Residency is when the federal-versus-private decision is hardest. On RAP, your payment is based on a resident’s salary, which keeps it low, and unpaid interest is waived when you pay on time. If you’ll end up at a nonprofit academic hospital, those years can count toward PSLF. Several refinance lenders market reduced payments during residency, but read the terms closely: interest usually keeps building on the full balance. Many physicians wait until they know their attending job before deciding.
How you file taxes now shapes the comparison. Under RAP, joint filers are assessed on combined income, but when both spouses have federal loans the payment is split according to each spouse’s balance. When only one spouse has loans and you file jointly, the combined income raises that borrower’s payment with no offsetting split. Filing separately counts only your own income, which can sharply lower the payment, but can cost you tax credits and the student loan interest deduction. A refinanced private loan ignores your spouse’s income entirely, which can make it the simpler choice for a high-earning household.
A new grad with an offer letter can often qualify, and some lenders accept applications in the final semester. But your credit history is short, and your first job may not be your last. Many borrowers do better waiting six to twelve months: build on-time payment history, see how stable the job is, and then price a refinance with a stronger profile.
Fixed or Variable?
Variable rates can start lower, but they move with a market benchmark, usually SOFR. The right choice depends on how fast you’ll repay.
| If you… | Choose | Why |
|---|---|---|
| Will repay in 3 years or less | Variable can work | Less time for rates to rise against you |
| Need a predictable budget | Fixed | Payment never changes |
| Choose a 10- to 20-year term | Fixed | Long exposure to rate swings |
| Pick variable anyway | Check the cap | Laurel Road caps at 15%; others vary |
Tax Rules That Affect the Decision
The temporary federal exemption for forgiven student debt was not extended, so balances forgiven under income-driven plans from this year on can count as taxable income. For a borrower counting on forgiveness after 20 to 30 years, that future tax bill narrows the gap between staying federal and refinancing. It doesn’t affect PSLF, which remains tax-free.
The reconciliation law made the exclusion for loans discharged because of death or total and permanent disability permanent for discharges after December 31, 2025, covering both federal and private loans, as long as the borrower’s Social Security number is on the return. If your refinance lender offers these discharges, the forgiven amount shouldn’t create a federal tax bill.
Interest on a refinanced student loan is still deductible, up to $2,500 a year, subject to income limits. The reconciliation law didn’t change the deduction.
Student Loan Scams to Watch For
Every federal policy change brings a wave of calls and texts promising to “enroll you in forgiveness” or “lock in the new plan” for a fee.
Anyone asking for an upfront fee to change your repayment plan or apply for forgiveness. Requests for your FSA ID or password. Claims of a special “Biden,” “Trump” or “new law” forgiveness program available only through them. Pressure to sign a power of attorney. Choosing a federal plan, applying for PSLF and consolidating are free at studentaid.gov or through your servicer. A legitimate refinance lender charges no application fee and never asks for your FSA login.
Our Verdict
You have private loans, or federal graduate and PLUS loans with a stable private-sector income, a 720-plus score and no plan to pursue forgiveness. You can save thousands over a 10-year term.
You work in public service, your income is uncertain, your balance is large relative to your income, or your federal rate is already low. RAP and IBR are worth more than a slightly lower rate.
You have a mix. Refinance the expensive loans, keep the cheaper federal ones as a safety net, and revisit the decision once a year.
Questions people still ask
How often can I refinance?
As often as a lender will approve you. There’s no limit, and if rates fall or your credit improves you can refinance again. Just watch for hard inquiries stacking up.
Can I refinance without a degree?
At some lenders. SoFi and RISLA will refinance for borrowers without a degree, and Earnest accepts some borrowers near graduation who have a job. ELFI and Citizens require a bachelor’s degree.
Is there a minimum amount to refinance?
Usually. SoFi requires at least $5,000, and most lenders set a similar floor.
What happens to my PSLF count if I refinance?
It’s lost for any loan you refinance. Private loans never qualify for PSLF.
Can I refinance while I’m still in school?
Generally not. Lenders want loans that are in repayment or about to be, and SoFi excludes loans used by currently enrolled students. Some lenders accept applications in your final semester with a job offer.
How long does a student loan refinance take?
Pre-qualification takes minutes and a full application can be approved within days, but the payoff to your old servicers often takes one to three weeks to post. Keep paying your existing loans the whole time, and don’t stop until each one shows a zero balance and you have the payoff letter.
Should I refinance before federal rates change again?
Federal rates on existing loans never change; they’re fixed for life. New rates apply only to new loans disbursed each July.
How this page was checked. Federal plan rules, rates and limits were checked against Education Department information, university financial aid offices and recent reporting on or before October 22. Court developments were checked against case reporting through October 21. Refinance rates and lender features come from lender disclosures and marketplace data reported in October; lenders sometimes publish different figures in different places, and we show the most recently reported range. Debt totals come from the Federal Reserve Bank of New York. Payment examples are our own math unless a lender’s published example is cited. This is general information, not financial, tax or legal advice.
This page is independent and not affiliated with any lender or the U.S. Department of Education.
Key sources: StudentAid.gov · U.S. Department of Education · Federal Reserve Bank of New York · Consumer Financial Protection Bureau · lender disclosures