When you refinance student loans, you are essentially transferring your current student loan balance to a new lender (e.g. a credit union, private bank).

Once the new lender approves your application to refinance, they’ll pay off the student loan amount you have with your original lender and issue you a new loan that should have more favorable terms and conditions.

Who Qualifies for Student Loan Refinancing?

As long as your credit score is in good standing, you should qualify for student loan refinancing. But even if you need to improve your credit score, you still might be eligible for refinancing with the help of a co-signer.

What’s a co-signer?

A co-signer is someone who helps reduce the risk of refinancing by signing a contract to be responsible for making loan payments if, for whatever reason, you can’t.

Who can be your co-signer? Usually, your co-signer will be a family member. For example, you might ask one of your parents to be your co-signer if they have a good credit score and stable income.

Should You Refinance Student Loans?

It depends. You might consider student loan refinancing an option if you find you can’t make your student loan payments because the monthly payments are too high. But that doesn’t mean it’s always a good idea.

Pros and Cons of Refinancing Student Loans

Before refinancing student loans you should know that it isn’t the right move for everyone. There are pros and cons. Let’s take a look at those now. And then, if you decide it’s a good decision for you, keep reading to learn how to refinance student loans in 5 steps.

Pros of Refinancing

One monthly payment. When you refinance student loans, you convert multiple loans into one loan with a private lender. This means you’ll only have to keep up with one monthly payment instead of worrying about making multiple payments to multiple lenders each month.