If you feel like you're paying too much on your student loans and want to save some money, refinancing and consolidation may be right for you!

College is getting more expensive every year. While going to college is surely something to be proud of, and is a great investment in your future, most students and their families are unable to pay for it out-of-pocket. After all scholarships and grants have been exhausted, the next option is student loans. Nowadays, 7 out of 10 college graduates have student loan debt and the average has over $35,000! If you took out a loan to pay for college, you are probably paying too much, and could potentially save thousands through refinancing!

Refinancing your student loans is just like refinancing your car loan or home mortgage. The new lender pays off your old loan and gives you a new one with new, hopefully lower interest rate. By lowering your interest rate, less additional money will be added to your total balance each month, ultimately saving you money! Most lenders also allow you to refinance and consolidate multiple loans into one, making repayment much more manageable. In the following sections, we will go over the best student loan refinance and consolidation lenders in the industry and what they offer.

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Lender

Rates (APR)

Loan Types

Terms

Eligible Degrees

2.18% - 4.74%

Variable & Fixed

5, 10, 15, 20

Undergrad &

Graduate

2.13% - 3.50%

Variable & Fixed

5, 10, 15, 20

Undergrad &

Graduate

earnest-logo-2016

2.13% - 3.50%

Variable & Fixed

5-20

Undergrad &

Graduate

2.21% - 4.14%

Variable & Fixed

5, 10, 15, 20, 25

Undergrad &

Graduate

Top 4 Companies for Student Loan Refinancing and Consolidation


1. Citizens Bank - Top Rated Company for 2016

Lower interest rates and payments are available.

Customers save $1,764 per year on average!


Refinance to a Lower Rate ->

    • Federal and private student loans are eligible
    • Variable rates start at 2.18%
    • Fixed rates start at 4.74%
    • Repayment plans of 5, 10, 15, and 20 years
    • Minimum of $10,000 in student loan debt to refinance
    • No application, origination, or prepayment fees

2. SoFi

Refinance with the largest refinancing company.

Members save $14,000 on average!


Lower Rates Are Available ->

    • ​February $200 cash bonus through my link: click here
    • Federal and private student loans are eligible
    • Variable rates start at 2.13%
    • Fixed rates start at 3.50%
    • Repayment plans of 5, 10, 15, and 20 years
    • Minimum of $10,000 in student loan debt to refinance
    • No application, origination, or prepayment fees

3. Earnest

earnest-logo-2016

You should refinance those crappy old student loans.

Average client saves $17,936.


Savings Start Today ->

    • Federal and private student loans are eligible
    • Variable rates start at 2.13%
    • Fixed rates start at 3.50%
    • Repayment plans anywhere between 5-20 years
    • Minimum of $5,000 in student loan debt to refinance
    • No application, origination, or prepayment fees
    • Bi-weekly payments option available

4. U-fi Student Loans

Thinking about refinancing?

Average client saves $13,000.


Refinancing Today ->

  • Federal and private student loans are eligible
  • Variable rates start at 2.21%
  • Fixed rates start at 4.14%
  • Repayment plans of 5, 10, 15, 20, and 25 years
  • Minimum of $5,000 in student loan debt to refinance
  • No application, origination, or prepayment fees
  • Cosigner release after 12 months of on-time payments of principal and interest

This post is the result of extensive research into the best options and compares the 9 most common online consolidation and refinancing choices. These companies are all reputable private or federal student loan refinance and consolidation companies that accept online applications.

If I have missed any companies please let me know and I will add them to this comparison post. If any of the information gets out of date or is incorrect let me know and I will update it!

Should you apply to more than 1 company to consolidate and refinance your student loans?

Yes, according to FICO all student loan applications made in the previous 30 days does not impact your credit score and having a group of applications on your credit history gets grouped to minimize impact. There is no harm in applying to all.

Consolidation Company Comparison Table:

For detailed company reviews look below, but this table compares all 9 compmanies.

Best Student Loan Refinance & Consolidation Company Reviews

1

Citizens Bank Review

Citizens Bank is one of the oldest and most trusted refinancing and consolidation options in this list. They have few of the social “bells and whistles” that the options above have, however with competitive interest rates and a broad acceptance criteria they are a good option to consider. Citizens Bank works with borrowers who have federal and private student loans

Loan Rates and Longest Term

  • 2.18% Variable Rates
  • 4.74% Fixed Rates
  • 20-Year Max Repayment Term

Eligibility

  • Graduation is not a requirement
  • US Citizen or Permanent Resident
  • $10,000 Minimum to Refinance
  • Must have made 3-12 full on-time payments on all loans
  • 24,000 Annual Income Required
  • Credit Score, Income, and Employment History are all considered

Pro

  • One of the few consolidate and refinancing options where graduation is not a requirement.
  • The long term fixed interest rate is very competitive!

Con

  • Slow application process and long 36-month co-signer release.

Best For…

  • Citizens Bank is best for any former student who did not complete college but has a history of making their student loan payments in full.
citizens bank refinancing
2

SoFi-Social Finance Review

SoFi has recently become the largest provider of student loan refinancing according to their website with $6,000,000,000+ in loans issued (that is a lot of zero’s!).


They as well are a relatively new entrant to the student loan refinance and consolidation space. They are not exactly a peer-peer lending company but accept capitalization/investment from Accredited Investors which then gets lended to students in the form of refinancing loans.


What makes SoFi unique is both the company's size and unique programs including its 2 main community programs.


SoFI Entrepreneur Program

The Entrepreneur Program offers a 6 month “grace” period for graduates who are building a new business.

Sofi's Entrepreneur Program is a prime example of how SoFi is creating a supportive community for its borrowers.

Marc Weiser
Managing Director/RPM Ventures

SoFI Career Services

The Career Services program at SoFI offers career planning and job search assistance to borrowers.

This is a very novel idea that makes a lot of sense for the company since borrowers who have a job are more likely to be able to repay their loans. This is the novel kind of program that many traditional lenders would be unlikely to ever offer.

After I was laid off, I got a call from SoFi asking how they could help me find a job. I was completely blown away.

Catie Gould
Rensselaer

Loan Rates and Longest Term

  • 2.13% Variable Rates
  • 3.50% Fixed Rates
  • 20-Year Max Repayment Term

Eligibility

  • US Citizen or permanent resident (some states not accepted)
  • Employed or have an offer of employment
  • Graduated from a 4 year school 

Pro's

  • SoFi is a great all around option with some very low interest rates which also includes some beneficial social programs.
  • SoFi is a lender who refinances and consolidates both federal and private student loans.
  • Extras like career services and the entrepreneur program are great extras for people who can take advantage of these programs.
  • No Credit Check Required

Con's

Although SoFi presents a company with a strong customer support focus they seem to have struggles with their size and providing the customer support they promise. There are many complaints at CreditKarma involving…

  • Large and growing company (for good reason) sometimes has hiccups in communication

Best For…

  • SoFi is a great all around option which is evident by their rise to become one of the most popular lenders.
sofi-consolidation-review
3

Earnest Review

earnest-logo-2016

Earnest is arguably the most unique student loan refinance and consolidation lender. Their unique eligibility criteria is like no other!


Loan Rates and Longest Term

  • 2.13% Variable Rates
  • 3.50% Fixed Rates
  • Repayment term anywhere from 5-20 years
  • Co-signer Release Available
  • Interest-Only Repayment Available

Eligibility

  • US Citizen or Permanent Resident
  • Income of $24,000 per year

Pro's

  • Earnest offers competitive interest rates with some additional benefits including the interest-only option.
  • Earnest's unique refinancing criteria uses hundreds of data points, not just a credit score like many other lenders.

Con's

  • Earnest is a relatively new lender so there is not much of a track record to judge.

Best For…

  • An Earnest refinance and consolidation loan is best for someone who is willing to handle a slightly more complex application process in return for a greater chance of approval.
earnest refinancing
4

LendKey Review

CU Student Loans or LendKey’s Grad loan is another non-typical lender which aggregates the best consolidation loans from many Credit Unions.


Loan Rates and Longest Term

  • 2.13% Variable Rates
  • 3.50% Fixed Rates
  • 15 year max term
  • Co-signer Release Available
  • Interest-Only Repayment Available

Eligibility

  • US Citizen or Permanent Resident
  • Income of $24,000 per year

Pro's

  • cuGrad student loan consolidation offers a competitive interest rate with some additional benefits including the interest-only option.
  • By aggregating 100’s of Credit Unions the risk profile of the credit unions will be different and you ability to get awarded a loan goes up.

Con's

  • You will need to become a member of the credit union that offers you a consolidation loan. This can add some complexity and time to the process.

Best For…

  • A LendKey consolidation loan is best for someone who is willing to handle a slightly more complex application process in return for a greater chance of approval.
5

Common Bond Review

CommonBond is another relatively new offering in the student loan marketplace. They specialize in consolidating loans for graduates from select colleges with advanced degrees.


What makes CommonBond unique is the 3 following aspects of their company…

  • Their focus is on making the future earnings potential of advanced degree holders reflected in their student loan consolidation.
  • The loans are funded through a peer-peer consolidation platform
  • For every loan funded on their platform they fund the education of one student in need for one year. This is funded through the Pencils of Promise charity.

Loan Rates and Longest Term

  • 1.92% Variable
  • 3.89 Fixed
  • 20 year max term

Eligibility

  • US Citizen or Permanent Resident
  • Must be have graduated from 1 of 700 schools/programs including (MBA, Engineering, Law and MD from select colleges)
  • Employment History, Credit History and Income are all considered as well

Pro

  • CommonBond offers some of the most competitive rates on loan consolidations
  • If you are looking to work with a company that has a strong social commitment CommonBond is a great choice.

Con

  • Selective used to only offer to 100 programs but continuously opening up to new people now offering consolidation loans for 2000+ programs

Best For…

  • Consolidating your loans with CommonBond is best for a graduate from one of their selective graduate school programs listed. Their competitive rates and social commitment make them a great choice (if you can qualify!).

common-bond-consolidation-review
6

Darien Rowayton Bank

Darien Rowayton Bank offers competitive rates for students from select programs and advanced degrees. Similar to Common Bond DRB offers competitive rates but it can due so by being very selective of the programs graduates come from. DRB also offers these consolidation loans to parents who took out student loans for their children. Graduate degree programs are not limited to MBA, Law, Doctor and engineers.

DRB is the second largest lender in the student loan space.

Employment and future earning potential is not the main focus of DRB. We look at a borrower’s credit and accomplishments. DRB recognizes that by completing your college or graduate degree and landing a professional job, you’ve earned lower student loan rates. We believe that working professionals with degrees have proven their ability to pay back student loans.

Loan Rates and Longest Term

  • 1.90% Variable
  • 3.50% 5 Year Fixed
  • 20 year max term

Eligibility

  • US Citizen or Permanent Resident
  • Graduate from Title IV eligible schools
  • Graduate from select undergraduate and graduate programs (engineering, MBA, Law, Doctor)
  • Employment and future earning potential is main focus of DRB
  • Credit Score and Employment History are Considered

Pro

  • Competitive interest rates and available for parents as well.

Con

  • Very selective based on the program you have graduated from and has one of the highest income qualifying expectations.

Best For…

  • DRB is best for Parents or Graduates who have graduated and started working from one of the qualifying programs. DRB and CommonBond should both be applied to if you have an advanced degree from a qualifying school.

darien rowayton bank consolidation review
6

Wells Fargo

If you are already a Wells Fargo customer Wells Fargo is a good option with both an existing customer and automatic payment discount of 0.25% each. With a competitive interest rate of 3.75% (absolute lowest) they can be a good private and federal student loan consolidation option.

Loan Rates and Longest Term

  • 3.75% Variable
  • 7.24% 5 Year Fixed
  • 20 year max term

Eligibility

  • $12,000 annual income
  • One year of full time employment
  • Solid credit score is required

Pro

  • If you are a customer of WF then with the discounts the variable interest rate can be competitive. In addition the qualifying standards are lower than many of the other options.

Con

  • Slow application process 45-60 days and a high interest rate, especially if you are not an existing customer.

Best For…

  • WF is a good option if you are already a Wells Fargo customer and have lower gross income.
wells-fargo-consolidation-review
7

WSFS Bank

WSFS Bank is a medium sized bank which is offering student loan consolidations. Their interest rates, borrower forgiveness and extras do not make them competitive when compared to the other offerings. The only benefit I see going with WSFS Bank compared to other options is the fact that they have one of the lowest minimum limits of $5,000. The application process for WSFS is actually through the CU Student Loans platform.

Loan Rates and Longest Term

  • 4% Variable Rates
  • 6% Fixed Rates

Eligibility

  • US Citizen or Permanent Resident
  • Unknown – Credit Score, Employment History and Income will impact eligibility

Pro

  • There are few strengths to WSFS compared to other options that I can find. The biggest difference is that they have a $5,000 minimum consolidation which is lower than most others.

Con

  • Interest rates are higher and there are no additional benefits compared to other options.

Best For…

  • Students with between $5,000 and $10,000 to consolidate.
WSFS-consolidation-review
8

Prosper

If you are struggling to refinance and consolidate your student loan than true peer-peer lending sites are an alternative option. There are many downsides to this option however, if you are unable to consolidate from other sources this is the lender of last choice. Do not consolidate federal student loans here as both the interest rate and repayment terms will be harsher.


Loan Rates and Longest Term

  • 6.73% 5 Year Fixed
  • 5 year max term

Eligibility

  • Minimum 640 Credit Score

Pro

  • Does not require a cosigner or other employment, income history

Con

  • Higher interest rates and shorter term compared to the other options.
  • Requires a minimum of 640 credit score

Best For…

  • Recent grads with good credit, no cosigner and no current employment/income history should consider Prosper to see if the loan would have a lower interest rate than their current student loans.
prosper-consolidation-review

Benefit of Consolidating and Refinancing Student Loans

There are 3 possible benefits to consolidating and refinancing student loans.

  • Lower your monthly rate
  • Take advantage of low interest rates
  • Convenience of 1 montly payment

The main downside is extending the term of the loan and increasing the total amount you will pay in interest.

For example if you owe a total 50,000 in Student Loans at 5% interest and a 10 year term with 5 

different lenders(10k/each) then consolidate to one lender and a 25 year term your monthly payments would go from $530/month to $292/month but the Total Interst Payable will go from $13,639 tp $37,688.51.
  • Owe – $50,000
  • 5 different lenders
  • Interest Rate – 5% Term – 10 years
  • TOTAL Monthly Payment – $530.33
  • TOTAL Interest Payable – $13,639.31

Consolidate 5 loans to decrease monthly payment by extending length of loan

  • Owe – $50,000
  • 1 Consolidate lender
  • Interest Rate – 5%
  • Term – 25 years
  • TOTAL Monthly Payment – $292.3
  • TOTAL Interest Payable – $37,688.51
Student Loan Payments Over 10 Year Term

Student Loan Payments Over 10 Year Term

Student Loan Payments After Consolidation For 25 Year Term

How To Consolidate Federal Student Loans

If you hold federal student loans with the government you have 3 options.

Option 1 – Special Direct Consolidation Loans (limited time)

Special direct consolidation loans or (Obama student loan) are a temporary opportunity for borrowers who meet a set of criteria to roll their loans into one Loan held by the government.

Borrowers that are eligible must…

  • Have one or more student loans held by a commercial lender in the Federal Family Education Loan.
  • Have one or more student loan held by the Federal Government

The benefits of the Special Direct Consolidation Loans include reducing interest rate and not having to significantly change your repayment terms if you do not want to.

The difference with the Special Direct Consolidation Loan from a traditional loan is that each loan consolidated retains its original repayment term allowing you to save money in interest over the life of the loan.

A second key difference with the Special Direct Consolidation Loan is that it allows other Student Loan Companies loans to be consolidated with this Federal program

Option 2 – Direct Consolidation Loans

A direct consolidation loan is a way to consolidate multiple federal student loans into one. When you consolidate federal student loans you will reduce your monthly payments by extending the length of the loan and potentially reducing the interest rate.

The benefit of a direct consolidation loan is that you can significantly reduce your monthly payments however you should also determine what the added interest cost over the life of the loan will be.

Option 3 – Consolidate and Refinance Your Federal Student Loan into a Private Consolidation Loan

If you hold a student loan from the Federal Government and want to consolidate it you may be able to find student loan companies that offer better interest rate than you can find from the Government.

The downside to consolidating a Federal loan into a private loan can be the aggressive interest rate increases from some companies. Some student loan consolidation companies will offer a teaser interest rate to attract student to consolidate their federal loan with them but then gradually increase the rate.

Make sure the benefits of consolidating a federal student loan into a private loan outweigh the costs.

Option 4 – Peer 2 Peer Lending to Consolidate Student Loans

This is a relatively new option but with the growth of peer to peer lending sites there is the opportunity for students who dont qualify for traditional consolidation loans to get one through one of these sites. Lending Club and Prosper.com are the 2 most common ones.

How To Consolidate and Refinance Private Student Loans

When you get a private student loan it falls under some of the same rules as a federal student loan, specifically if you declare bankruptcy your student loan debt will not go away.

When you consolidate a private student loan you achieve the most significant benefit of being able to combine multiple monthly payments into one payment to one loan modification company.

It can be a good idea to consolidate private student loans if your Credit Score has improved.

There are websites where you can check your credit score for free 

Consolidate your student loan and mortgage – One option if you are a few years out of College and you own a home which has appreciated in value is to take out a Home Equity Line of credit and pay off your student debt. This is essentially consolidating your Student Loan with your Mortgage. The benefit is the ability to have the lower payments

Frequently Asked Student Loan Consolidation and Refinancing Questions

What is the difference between student loan consolidation and refinancing?

Student Loan Consolidation is technically the combining of multiple federal education loans into one loan which takes the weighted average of the interest rate and lowers the monthly payment by extending the loan over a longer term.

Refinance is paying off your current loans and accepting a new loan at a lower interest rate/longer term to create a loan that better suits our needs.

In this article I have used refinance/consolidate interchangeably as that is what most of us mean when we say consolidate.

Dan Macklin from SoFI has a great post at DailyWorth going into more detail – Should you consolidate or Refinance Your Student Loans.

Can I consolidate both private and federal student loans?

Yes, many of the lenders above offer opportunities to consolidate both federal and private student loans.

When consolidating a federal student loan be sure to think about your ability to repay it. Private loans have much stricter collection programs when compared to a federal student loan.

Can I consolidate my loans if I didn’t finish college and never graduated?

Yes, but your options are limited. Currently there are three options you can apply for with your best being CharterOne. If you don’t get accepted at Charter One than Prosper and Personal are options to consider.

Should I apply to all companies and how will applying to multiple companies affect my credit score?

There are 2 downsides to applying to all companies.

Your time – Applying to all can take a lot of time but if you really want to find the best consolidation loan for you.

Your Credit Score – The more people who have looked at your credit score the more your credit score will go down…is the common “myth” in fact if you have many similar searches within the same time period it is clear you are shopping for a single product and this group of searches essentially gets treated as one search. Therefore, it does not impact your credit score applying to multiple loans. FICO ignores all student loan searches made in the previous 30 days according to their website here.

Sallie Mae Student Loan Consolidation Options?

Sallie Mae does not offer this service…

“At present, Sallie Mae does not offer consolidation loans.”

However, if you have Sallie Mae student loans any of the options above are viable refinance/consolidation options.

Chase student loan consolidation options?

Does Chase offer a private student loan consolidation option and if so what are the rates?

According to their Student Loan Servicing website “We’re sorry, but we do not offer a private consolidation loan product”

If you have a Chase Student loan your consolidation options are the lenders listed above and below in the table.

CitiBank student loan consolidation options?

Does CitiBank offer a private student loan consolidation option and if so what are the rates?

Again, Citi does not have a consolidation option according to their website.

Any of the lenders in the table can consolidate a CitiBank student loan if you have a Citi Student Loan.

How to calculate debt to income ratio (DTI ratio)?

Add up all your recurring debt obligations (mortgage payments, car loan payments, student loan payments and minimum payment on credit card balance) then divide by your gross monthly income.

If you want to see more details about how to calculate the debt to income ratio here is a great article - CommonBond – Student Loan Concepts Explained – Debt to Income Ratio

Which is better a fixed or variable rate loan?

A variable interest rate will be lower initially but depending on where the prime interest rate goes the rate will climb.

There are a lot of posts that analyze this question in depth including a great post at SoFI Fixed vs Variable.

The bottom line to me is if you are risk adverse then stay with a fixed loan while if you are more risk tolerant than a variable will on average cost you less in the long run.

Andrew Josuweit recommends

“Before you refinance your student loans or switch loan types, be sure to ask the right questions!

For example, does the variable interest rate have a cap? A cap places a maximum limit on how high a variable interest rate can go. This type of mechanism can be a great protection against rising interest rate risk.

Also, be sure to calculate the savings difference between variable and fixed rate student loans. Are the potential savings worth taking a risk?”

Can a parent who took out a student loan for their child consolidate?

Yes a parent can consolidate a student loan that was taken out for their child. Often with the income and employment history parents can get some of the most competitive interest rates.

One of the lender that specializes in providing consolidation loans to parents is Darien Rowayton Bank (DRB).

Can an international student consolidate student loans?

If you are an international student you are probably sick of seeing “US Citizen or Permanent Resident” but unfortunately that is the case. You must be at least a permanent resident or get a co-signer who is a US citizen or permanent resident. If you are looking for more information on International Student Loans you can visit the experts at InternationaStudentLoan.com and their article International Student Loan Consolidation which echoes the same...

“You will need a US cosigner for student loan consolidation”

When is the right time to refinance/consolidate my student loans?

The right time to consolidate student loans is whenever you can save money at an acceptable risk level.

What I mean by that is if you can consolidate/refinance your loans now and it will save you money without increasing your risk then it makes sense to do so. It may not make sense if you have federal student loans only and can save $100/year…you are increasing your personal risk due to more aggressive collections for minimal benefit.

However, the majority of students who qualify for consolidating student loans would be better off financially consolidating as soon as they are eligible.