Considering refinancing your student loans? Here are 4 big banks that can help you

For many borrowers, student loan debt is a large financial burden. Even if borrowers make consistent monthly payments, interest charges increase their balances to heights that feel even more strenuous to pay off. Under the right circumstances, however, student loan refinancing can make paying down student loans feel like less of a tall task.

When you refinance a student loan, you essentially apply for another loan through a private lender and that lender uses those funds to pay off your student loan. Then, you’ll just be responsible for paying back the new loan. The trick here is to make sure that the interest rate you receive on the new loan is lower than the interest rate on your original loan. This way, you’ll actually save money on interest charges. 

Whether you start off with a private student loan or a federal student loan, you can still undergo the refinancing process. One thing to keep in mind, though, is when you refinance a federal student loan, you’re essentially replacing it with a private loan. This means that you would no longer qualify for any federal protections on your loan, such as the payment pause during the pandemic or President Biden’s sweeping debt cancellation plan for federal loan borrowers. 

There are many lenders that can help you refinance your student loans, but Select ranked the best big banks for student loan refinancing to make the process easier for you.

The best big banks for student loan refinancing

FAQs

Best for large loan balances

Discover Student Loan Refinancing

  • Cost

    No origination fees or application fees

  • Eligible loans

    Federal and private graduate and undergraduate loans

  • Loan types

  • Variable rates (APR)

  • Fixed rates (APR)

  • Loan terms

  • Loan amounts

    A minimum of $5,000 and a maximum of $150,000; higher limits may apply to certain fields of study

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Pros

  • No application fees, origination fees, or late fees
  • 0.25% interest rate reduction if you enroll in automatic payments
  • No prepayment penalties
  • Doesn’t require borrowers to have graduated
  • Deferment options available if you go back to school, are on active military duty, attend a health professions residency program, or are part of certain public service organizations

Cons

  • No option to have co-signers released from the loan after a certain number of qualifying payments has been reached
  • Residency loans and other post-graduate loans are not eligible
  • Loans taken out while you were enrolled in school less than half-time do not qualify

Who’s this for? Discover allows borrowers to apply for as much as they need to cover their entire student loan debt balance. Some student loan refinance lenders cap the maximum loan amount at around $150,000 to $300,000. Having no set maximum amount means you won’t have to worry about your balance not being covered. This can be appealing to those who have much larger student loan balances that likely won’t be covered by other banks and lenders.

However, Discover does have a minimum balance needed to apply — $5,000. Loan term options include a 10-year period or a 20-year period.

Applicants who have an insufficient credit history may consider applying with a co-signer to help them qualify for the new loan with a lower interest rate. Unlike some other lenders, though, Discover does not release co-signers from the loan after a certain number of qualifying payments have been made; co-signers would be responsible for the loan alongside the primary borrower until it is fully paid off.

Best for interest rate discounts

Citizens Bank Student Loan Refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency loans.

  • Loan types

  • Variable rates (APR)

  • Fixed rates (APR)

  • Loan terms

  • Loan amounts

    A minimum of $10,000, up to $300,000 (bachelor’s degree or below) or $500,000 (graduate degree)

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Pros

  • No origination fees to refinance
  • Up to 0.50% rate discount available for existing Citizen customers and enrolling in autopay
  • Soft credit pull when you prequalify
  • No prepayment penalties
  • Has co-signer release option after 36 consecutive, on-time monthly payments of the loan’s principal and interest
  • Doesn’t require borrowers to have graduated

Cons

  • Late payment fee of 5% of the unpaid amount of the payment due
  • Must be an existing Citizen Bank customer to get the full rate discount

Who’s this for? Citizens Bank offers a 0.50% rate discount on your refinanced loan when you use automated payments from your checking or savings account. A rate discount can be super beneficial, as you can save a bit more on interest. 

To be eligible, the borrower and cosigner have to be US citizens or permanent resident aliens, the borrower must be at least the age of majority in their state of residence, the borrower—if they have not obtained an associate degree or higher—must have made 24 consecutive payments on at least one education loan in the last two years, both borrower and cosigner are subject to credit approval and the borrower on an individual application and the borrower and cosigner on a joint application have to show current and continuous income. 

You can borrow between $10,000 and $300,000 for a bachelor’s degree or below, or up to $500,000 for a graduate degree.

Citizens Bank also does not charge application fees, origination fees or disbursement fees, and there is no prepayment penalty, which means you can pay off your loan earlier than expected without being charged a penalty. You can also check your interest rate without hurting your credit score.

Best for having a co-signer

PNC Bank Student Loan Refinancing

  • Cost

  • Eligible loans

    Federal and private graduate and undergraduate loans, Direct Parent PLUS loans, direct consolidation loans, Federal Perkins loans, Federal nursing loans; for a complete list of eligible loans, see here

  • Loan types

  • Variable rates (APR)

  • Fixed rates (APR)

  • Loan terms

    5, 10, 15, or 20 years (20-year terms not available for Associate-level programs and are unavailable to undergraduate and graduate degree borrowers who need more than $75,000)

  • Loan amounts

    Minimum amount is $10,000 but maximum loan amounts vary by degree level

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Pros

  • No prepayment penalties
  • 0.5% interest rate reduction if you enroll in automatic payments
  • Doesn’t require borrowers to have graduated
  • Available to a wider array of loan types
  • Online application
  • Deferment options available under instances of economic hardship, unemployment, or military deployment

Cons

  • Higher minimum amount requirement of $10,000 to refinance
  • The maximum refinance amount of $200,000 is not available to all degree levels

Who’s this for? PNC Bank may be most appealing to those who need a co-signer since co-signers can be released from the loan after at least 48 qualifying on-time payments have been made with no forbearances during that time period. Both you as the borrower and your cosigner are subject to credit approval, and you may have to provide other documentation, and you and your cosigner have to show continuous and present income. 

The maximum amount you can borrow to refinance depends on your degree level. Graduate loans can be refinanced up to $200,000. Undergraduate loans have a maximum of $175,000. Associate’s degrees have a maximum of $75,000 and those who did not graduate can refinance up to $25,000.

It is important to note that not all refinance loans allow co-signers to be released from the loan even after a certain number of on-time payments have been made, so PNC having this feature can come as a unique relief to some co-signers who no longer have to be liable. 

Best for flexible repayment terms 

PenFed Student Loan Refinancing

  • Cost

    $0; no application fee or origination fee

  • Eligible loans

    Federal and private graduate and undergraduate loans

  • Loan types

  • Variable rates (APR)

  • Fixed rates (APR)

  • Loan terms

  • Loan amounts

    Minimum amount is $7,500 and maximum amount is $300,000

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Pros

  • Ability to check your rate without hurting your credit score
  • No prepayment penalties
  • Larger maximum loan amount for refinancing
  • Online application that can be completed in as little as 15 minutes

Cons

  • Must be a member to refinance your loan

Who’s this for? PenFed Credit Union offers fixed-rate student loan refinancing, which can be a good thing if you’re worried that a variable rate might eventually land you an interest rate that feels astronomical. This lender also offers some more flexible payment terms compared to other lenders who only offer 5-year, 10-year, and 15-year terms or even just 10-year and 20-year terms. You can instead choose from five-year, eight-year, 12-year and 15-year repayment terms.

PenFed offers loan amounts from $7,500 to $300,000. It’s also important to note that while anyone can submit an application, you need to actually become a PenFed member to move forward in the application process and review and sign your loan. If you aren’t already a member, you can sign up for a membership after submitting your application.

FAQs about refinancing student loans

What is student loan refinancing?

When you refinance your student loans, you trade in your current loan(s) for one new loan through a private lender.

If you have more than one student loan, once you refinance, your payments are then grouped together so you make only one monthly payment to one lender, instead of owing multiple monthly payments to various lenders. On top of getting a lower interest rate and streamlined payments, refinancing lets you alter the payment plan on your refinanced student loan. Terms vary by lender, but borrowers can choose how aggressive they want to be in their debt payoff, whether it’s five, 10 or 20 years.

How is my student loan refinancing rate determined?

The interest rates lenders advertise for student loan refinancing may not be the rate you receive. Lenders determine your APR based on a handful of factors, including your credit score, your income, your debt-to-income (DTI) ratio, your savings, whether you choose a variable or fixed rate and the length of your loan’s term.

How does refinancing affect my credit?

When you refinance your student loan, lenders will do a hard inquiry on your credit report to determine your borrower risk. This may lower your credit score by five or so points, but it’s likely to go back up as you continue to make on-time monthly payments on your new refinanced loan.

Many lenders as well as loan marketplaces offer prequalification tools where you can quickly input your personal information and see rate quotes from lenders without actually applying and affecting your credit. You’ll be able to get an idea of your interest rate, repayment term and any fees. Choose the lender that offers you an interest rate considerably lower than the one you currently pay.

Should I refinance my student loans?

The decision of whether to refinance your student loans is a big one to make. A major reason to refinance your student loan is to save money. Many of the student loan lenders advertise big savings on their websites. For example, in 2020 the average savings for customers at Education Loan Finance was $272 per month — and $13,940 in total average savings in interest costs over the life of the loan. That’s a pretty significant saving.

Before applying for refinancing, shop around for the best rates to see what you prequalify for. You can also use loan marketplaces like Credible to compare lenders.

You also want to make sure you’re in good financial standing before you start applying for a refinance. To get the best rates, you’ll want to meet the following requirements:

  • Good credit score
  • Stable income
  • Currently paying a high interest rate — anything at or above 10% — where you would be likely to save money through refinancing

You should also ask yourself the following questions:

  • Would you like to pay off your loans faster if you could shorten your repayment term?
  • Would you like to make your loan payments more manageable if you could extend your repayment term?

Federal student loan borrowers looking to refinance should be aware that doing so with a private lender means you lose any protections you previously had with your federal loans, like income-driven repayment, student loan forgiveness and any current or future relief measures (such as the payment and interest rate pause).

Some private lenders (like the ones we mention on this list) offer their own kinds of payment protections, such as deferment or forbearance, so make sure you know your options before taking out a refinanced loan.

Can I refinance my student loans multiple times?

There’s no limit on how many times you can refinance your student loan. In fact, one Select reporter refinanced their student loans six times and was able to save thousands in interest this way. The process to refinance student loans is quite simple and there usually aren’t any costs or penalties associated with doing so.

Is now a good time to refinance student loans?

Generally, student loan borrowers who are paying a high interest rate on their federal or private student loans may want to consider refinancing.

However, with the current suspension of federal student loan payments and interest through Dec. 2022, most financial experts don’t recommend refinancing your federal student loans at this time. You should also wait until your up to $20,000 in student loan forgiveness is processed.

It may be a good idea to refinance any private student loans if your interest rate is high. Although back on the rise, federal loan rates are still relatively low so private lenders are offering lower APRs. These companies set their own interest rates, but they’re influenced by the Fed’s prime rate. Rate cuts thus typically translate into a decrease in the rates that private lenders offer. APRs on refinanced student loans currently range from 3.22% to 13.95% fixed and 1.29% to 12.99% variable.

If you took out a private student loan years ago when interest rates were higher than they currently are today, you should consider refinancing, especially if your credit score is better than when you applied for your last loan. This way, you’re likely to score a lower rate and save money in the long run.

Will refinanced student loans be forgiven?

If you refinance your federal student loans, they will be taken on by a new private lender. Once you have private student loans, you will not be eligible for federal protections and benefits, including student loan forgiveness and the current moratorium on loan repayment.

Bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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