Key Takeaways:

• A series of 2026 federal policy changes drastically altered the student loan landscape and changed the math on refinancing for millions of borrowers.

•  While many borrowers with older loans retain access to federal forgiveness programs, changes to income-driven repayment plans could make loan forgiveness harder to get, and some federal hardship programs have ended. That could make refinancing an appealing alternative for many borrowers.

• Refinancing is the only way to get a lower interest rate on your student loan debt. 

• If you don’t qualify for a student loan refinance, consider pursuing other avenues of debt relief.

Table of Contents

1. What is student loan refinancing?

2. Is refinancing right for me?

3. Special considerations for graduate students

4. Should I refinance or consolidate my student loans?

5. How do you refinance student loans?

6. Finding a good refinance lender: How Earnest compares

7. What are the pros and cons of student loan refinancing?

8. Are there alternatives to a student loan refinance?

9. Am I eligible for student loan refinancing?

10. See how much you could save with Earnest

As new federal policies overhaul the student lending landscape, thousands of borrowers are being forced to reevaluate their student loans—especially where refinancing¹ is concerned. 

Refinancing can be a valuable financial tool, especially during times of economic stress. Refinancing your student loans could help you score a lower² interest rate, reduce your monthly payments, and get out of debt faster. That said, your mileage may vary based on your individual circumstances. Your income, employment history, and other factors will all determine whether refinancing makes sense for you. So will the types of loans you have. 

Consider, for example, federal vs. private student loans. If you refinance private loans, you’ll encounter very few downsides. Refinancing federal loans can be more complicated. Here’s how to choose whether or not to refinance—and what steps to take if you decide it’s right for you.

What is student loan refinancing? 

Student loan refinancing is a way of swapping your existing student loans for a single new loan, often with a new interest rate. First, you find a private lender—usually a large financial institution like a bank, credit union, or online lender. This lender agrees to pay off all your current loans. In exchange, they issue you a brand-new loan with new loan terms. If you have a decent credit score, you might also qualify for a lower interest rate on your refinanced loan. This can help you pay off your loans faster and save money over time. 

Refinancing is different from student loan consolidation, a federal program that’s only available for federal student loans. 

Is refinancing right for me?

If you have private loans, deciding whether to refinance usually comes down to some easy math: if you qualify for a lower rate with a lender you like, that’s usually a green light. Refinancing federal loans is trickier. When you refinance federal debt, it turns into private debt. That means you forfeit federal borrower protections. This process isn’t reversible.

Giving up federal benefits isn’t a move to be taken lightly. However, the Trump Administration’s One Big Beautiful Bill (OBBB) cut back many of these benefits. Those include income-driven repayment (IDR) plans, economic hardship deferment, unemployment deferment, and several pathways to student loan forgiveness. Some have been reduced. Others have been eliminated. 

On top of that, the OBBB made most student loan forgiveness taxable again. Now, most forms of forgiveness could be reported as income on Form 1099-C. That could increase your taxable income for that year by up to thousands of dollars, depending on how much debt you had canceled. There are some exceptions, like Public Service Loan Forgiveness (PSLF), which remains tax-free. PSLF also remains relatively achievable—eligible borrowers can secure it within just 10 years. Other pathways to forgiveness now take 20 to 30 years. 

So, to sum all that up: 

Refinancing your federal loans might make sense if… 

• You don’t qualify for PSLF and don’t plan to in the future.

• Your income is stable and growing, and you don’t need an IDR plan to make your monthly payments affordable.

• Refinancing can help you get a lower interest rate than what you currently have on your federal student loans.

Refinancing your federal loans doesn’t make sense if… 

• You qualify for PSLF or are very close to securing forgiveness under an IDR plan. 

• You’re relying on an IDR plan to keep your payments affordable.

• You don’t qualify for a lower interest rate through refinancing.

Want to see what kind of rate you might qualify for? Do a quick check online—it only takes minutes, and it won’t affect your credit score. 

Special considerations for graduate students

Among other things, the OBBB phased out the Grad Plus loan program, limiting federal borrowing options for advanced degree programs. As of July 1, 2026, federal Grad PLUS loans are no longer available for new borrowers. Many grad students have had to turn to private student loans to fill in the gaps. 

Many borrowers who end up with both private and federal loans find the mix unwieldy. Refinancing offers a way to bundle all your debts into a single loan with a single monthly payment. That includes undergraduate debt as well as graduate debt.

Another benefit of refinancing is that it could give you access to lower interest rates. Grad Plus was famously one of the government’s higher-interest loan programs. So, if you have outstanding Grad Plus loans, refinancing could help you save² money or potentially get out of debt faster.

Should I refinance or consolidate my student loans?

Student loan consolidation and refinancing may seem like similar programs, but they function very differently. Here are a few of the key differences.

Student loan consolidation…

• is only available for federal student loans

• gives you access to federal programs like deferment and student loan forgiveness

• does not require a credit check

• cannot help you secure a lower interest rate on your student debt

• cannot help you save money on your loans over the long run

Student loan refinancing…

• is available for both federal and private student loans

• turns federal debt into private debt

• forfeits access to federal protections like deferment or loan forgiveness

• requires a credit check 

• can help you lower your interest rate

• can help you save money on your loans over time

How do you refinance student loans?

Before you apply to refinance your student loans, take some time to figure out what you want. Come to the table knowing which loans you want to refinance, how quickly you’ll be able to pay them off, and how much you can afford each month. Here’s a closer look.

1. Make sure you understand your current loans

TL;DR: Before you refinance, take a look at your current interest rates, loan terms, and outstanding balances.

If you’ve made it this far, you’ve hopefully already taken stock of your loans and determined which you want to refinance. Remember that you don’t have to refinance all of your loans. You can refinance some and not others.

For example, you can refinance private loans but not federal, or you could refinance your unsubsidized federal loans while keeping your subsidized loans with the federal government. There’s nothing that requires you to refinance more than what you want to. Of course, lenders may have a minimum balance requirement, but these vary from lender to lender. Don’t refinance more than you’re comfortable with.

If you’re sure, set aside a chunk of time to sit down and give everything a once-over. For each loan, write down the following:

• Years left on the loan term

• Current loan balance 

• Monthly payment amount 

• Interest rate

• Name of the loan servicer 

• Whether it’s a private or federal loan

If you’re happy with any (or all) of your loan rates and terms, feel free to leave them as is. If some have high interest rates you’d like to reduce—or loan servicers you’d love to switch out—refinancing could be a good option.  

2. Figure out if refinancing makes sense for you

TL;DR: Refinancing only makes sense if it lowers your interest rate, reduces monthly payments, or helps you release a cosigner—otherwise, it may not save you money.

Once you’ve taken stock of your loans, decide whether refinancing is the right move for your needs. First, think about your goals. If you’re hoping to use refinancing to get out of debt faster, figure out the maximum monthly payment you can afford to make each month. If you’re hoping to use refinancing to lower your monthly payments, figure out what payment range fits in your budget. Keep these numbers in mind when you review loan offers.  

You may want to refinance if:

• You have a cosigner and want to release them from your loans by refinancing on your own, without a cosigner

• You have a credit score of 650 or higher and meet lenders’ other eligibility requirements 

• You qualify for a lower interest rate than you have on your current loans

• You have multiple student loans and want to bundle them into one single monthly payment

• You’re unhappy with your current loan servicer and want to switch your loans to a new one

• You want a lower monthly payment

3. Decide whether you should refinance federal loans

TL;DR: Refinancing federal loans could make sense for you if you have high interest rates, strong income, and no problem affording your current monthly payments.     

Refinancing your federal loans can be worth it if you can get a significantly lower interest rate. A lower rate could help you save up to thousands of dollars over the life of the loan and pay off your debt faster. The only downside is that you’ll lose access to income-driven repayment plans, PSLF, or other federal programs. However, only 11% of borrowers get accepted for forgiveness, and only about 5% of PSLF applications are approved. Meanwhile, private lenders increasingly offer many of their own  protections, including deferment and flexible repayment plans. 

Lots of borrowers cling to their high-interest federal loans on the off-chance that they’ll qualify for forgiveness one day, but few actually do. Before you decide, run the numbers³ and see how much those high federal interest rates are costing you. In some cases, it might be smarter to refinance and start saving money now instead of holding out hope for a hypothetical. 

4. Check your credit score

TL;DR: A credit score of 650+, a stable income, and a low debt-to-income ratio improve your odds of approval and securing the best refinance rates.

Once you have your refinance goals figured out, check your credit score to make sure you’ll qualify for refinancing. Most refinance lenders require a decent score—usually 650 or higher—before they’ll approve you. If your score is higher, you might qualify for even better refinance offers. 

You can download a copy of your credit report for free once per week through annualcreditreport.com. If your score is lower than you expected, scan your credit report for errors, report any mistakes right away, and make a plan to improve your credit.

While credit score is one of the most significant metrics lenders consider, they’ll also evaluate some other elements of your financial profile. While you’re checking your credit, also take stock of the following:

• Total savings: Lenders like to see that you have some cash in reserve so that you’re able to keep making your payments even in the event of job loss or another unexpected crisis. 

• Employment and income: A steady job and reliable income reassure lenders that you can keep up with your payments.

• Debt-to-income ratio: The lower your existing debt compared to your income, the more financially responsible you’ll look. 

What can impact your credit score:

• The variety of credit you have. (Creditors like to see a mix of credit cards, student loans, car loans, etc.)

• Your payment history—in other words, how good you are at making your payments on time and in full.  

• How frequently you apply for or open new credit accounts, including credit cards and loans. 

• How much of your total available credit limit you use each month.

Ways to strengthen your credit before applying:

• Open a no-fee credit card and pay the balance in full each month to bolster your payment history.

• Take out a credit-builder loan. 

• Set up automatic payments on all your existing credit accounts to avoid missing payments.

• Pay off as much of your existing debt as you can before applying.

• Request a raise or start a side gig to boost your income. 

5. Compare lenders

TL;DR: Shop around for lenders, focusing not just on rates but also repayment flexibility, discounts, and fees.

There are a ton of refinance lenders out there, and they vary widely in their policies, fees, and customer service. If you have a bank, credit union, or other lender you already love working with, that can be a great place to start. If you don’t, ask friends and family, do an online search, or ask a financial advisor what institutions they recommend. 

Once you have a few options, research each lender to get a better idea of what interest rates and loan terms they can offer you. That said, interest rate isn’t everything. Some lenders (including Earnest) also offer extra perks and protections that can make them a better fit. Read evaluations on independent review sites like Trust Pilot, and scan side-by-side comparisons to get a more comprehensive look at each potential lender. 

6. Check your rate

TL;DR: Getting prequalified will give you a better estimate of a lender’s actual rates without impacting your credit. 

It can be hard to choose a lender unless you know exactly what interest rate they can offer you. To that end, many institutions will let you check your rate ahead of time. This process, sometimes called “prequalification,” allows you to see what rates you may be eligible for without submitting an official application. In exchange for a few details about yourself, most lenders can show you what your odds of approval would be, the rates you may be offered, and the terms you may be eligible for. The biggest benefit to this process is that it’s fast and does not affect your credit score like submitting an official application would.

 Try checking your rate with at least three top-choice lenders to figure out who can offer you the best deal. Once you’ve made your decision, it’s time to apply. 

7. Gather the right documents

TL;DR: Be ready with personal info, proof of income, and the details of each loan.

The loan application process will go much faster if you get all your paperwork together ahead of time. Most loan servicers will require some combination of the following documents:  

• Recent statements for your current student loans  

• Proof of income (i.e., a paystub or your most recent tax return) 

• Social Security card or Permanent Resident card

• Driver’s license or ID

• Bank statements for checking and savings accounts

• 10-day payoff amount for each loan you plan to refinance

• Total balance of all your student loans

• Supporting documents like pay stubs or tax forms, if required

8. Choose your loan terms

TL;DR: Pick a rate type and repayment length that balance short-term affordability with long-term savings.

When thinking about the right loan terms, two things matter most: your interest rate and your repayment term. These will determine both your monthly payment and your total cost over time. Many refinance lenders will let you choose between fixed and variable rates.

Fixed vs. variable rates:

• Fixed rate: Your rate stays the same for the life of the loan, so your monthly payments are predictable. This is a good choice if you want stability and don’t want to risk rising rates.

• Variable rate: Might start lower than fixed, but can rise or fall with the market. This can save you money early on, but it’s less predictable. At Earnest, you may be able to switch between fixed and variable if you remain in good standing.

Loan term length:

• Shorter term: Higher monthly payments but less total interest paid overall. Good if you can handle larger payments and want to save money in the long run.

• Longer term: Lower monthly payments but more interest over time. Helpful if you need more flexibility in your budget.

9. Submit your application and review your offer

TL;DR: Double-check the fine print on fees and repayment policies before signing.

Once you’ve zeroed in on a top-choice lender and decided what loan terms you want to pursue, it’s time to fill out the application. Unlike checking your rate, filling out a refinance application triggers what’s called a “hard credit check.” This typically drops your credit score by a few points. So, it’s best to apply only with the lenders you’re serious about. 

If you decide to fill out multiple applications, try to submit them within a single two-week period. This is known as the “rate shopping period.” In this window of time, credit bureaus generally count all new loan applications as a single hard inquiry on your credit report. Since hard inquiries sometimes result in a small drop in credit score, lumping them together in this way can help mitigate the negative impact. 

Your lender will take a few business days to look over your application. If approved, you’ll then receive a loan offer, usually via email. Review the proposed terms and interest rates, as well as the fine print. If everything looks good, you can choose to accept. If something seems off, you can contact the lender directly with questions or turn down the offer and apply elsewhere.  

Before you sign:

• Read the fine print carefully. Some lenders charge late fees or other penalties. (Earnest doesn’t charge late fees, but policies vary.)

• Understand how your lender handles hardship. If you miss a payment or face unexpected expenses, will they offer options like deferment or forbearance?

10. Keep paying your old loans until the switch is complete

TL;DR: Continue payments until your old balances hit $0. Missing one during the transition could hurt your credit.

The refinancing process doesn’t end once you accept a loan offer. You’ll need to continue making your original loan payments until your new lender has paid off all your old loans. This transition period is typically called the “10-day payoff period.” 

You’ll receive a letter at the beginning of this process telling you to keep making payments as usual. When the process is complete, you’ll receive a second letter stating that your old loans have been paid off in full. At that point, you can begin making payments on your new, refinanced loan. 

Finding a good refinance lender: How Earnest compares

Some modern lenders, like Earnest, offer competitive refinancing rates and flexible repayment policies, but not all institutions offer the same benefits. Before you commit to a lender, read the fine print and make sure you have a complete grasp of their policies.

Earnest, for example, looks similar to other online lenders at first glance. However, the company offers up to 180 payment options as opposed to the industry standard of just five loan terms. We let eligible borrowers skip a payment⁴ once per year without penalty fees, and we never charge prepayment fees. Earnest will also match your grace period⁵ for up to nine months—longer than most competitors.

Earnest offers many repayment options and borrower protections. Keep these things in mind when you’re comparing lenders:

• Zero fees. Some lenders charge origination fees or other hidden costs. But Earnest never charges fees of any kind. 

• Discounts for setting up autopay⁶. Many lenders will give you a .25% interest rate reduction just for enrolling in automatic payments.

• Flexible repayment options. Some lenders offer more loan term options than others. Earnest, for example, lets you use a sliding scale to choose a monthly payment that works for your budget and financial goals. 

• Biweekly payment options. Paying biweekly instead of monthly can help you pay your loan down faster. Some lenders make this easy to set up. Others don’t offer the option. 

• Responsive customer service. Your new lender will be your financial partner for years, if not decades. Choose one that’s going to invest in that relationship with responsive, supportive customer service. The more helpful your lender, the less painful repayment will be.

• The ability to skip a payment. If you’re in good standing with Earnest and you fall on tough times, you can request to skip a payment once a year for a little reprieve. The amount of your skipped payment will be evenly spread out over the rest of your payment term.

• Deferment and other hardship protections. Some lenders offer hardship programs to borrowers who’ve fallen on hard times. Check whether your lender has deferment, forbearance, or skip-a-payment programs in place. 

• The ability to switch from fixed to variable interest rates. Earnest allows borrowers in good standing to refinance in-house every 30 days⁷—which makes it easy to switch between variable and fixed rate loans as market conditions change. 

• Cosigner release. Some lenders will let a borrower request to release a cosigner from their loan after a certain amount of time. Other lenders, like Earnest, allow borrowers to undergo an easy, additional refinance without a cosigner once they’re on stronger financial footing. This allows the borrower to take more complete control over the loan once they feel ready. 

The pros and cons of student loan refinancing 

If you’re wondering whether you should refinance your student loans, it’s important to consider the risks and the benefits. 

The benefits of student loan refinancing

• You could save thousands of dollars in interest. When you lower your interest rate, interest will accrue on your loans more slowly. That means you’ll be able to pay down the principal balance faster, getting ahead on your payments. Combine that with a shorter loan term, and you could save hundreds if not thousands of dollars over the life of your loan—and get out of debt much faster.

• You can choose between fixed and variable interest rates. When you refinance, you’ll be able to choose between fixed and variable interest rates. Some lenders (including Earnest) let qualifying borrowers switch their rate type later on as needed. 

• You’ll get to choose a new servicer. When you take out loans from the federal government, you don’t have much choice over your loan servicer. When you refinance, however, you can choose a company that suits your specific needs.

• You may be able to release your cosigner from your loans. If you have a cosigner on your current loans, that person is responsible for your debt in the event you can’t pay. Refinancing can help you release that person from their obligation, giving you full control over your own loans. 

• You’ll simplify your payments. Refinancing can roll all your student debt into a single loan, leaving you with just a single bill to worry about each month.  

• You can lower your monthly payments. When you refinance your loans, you’ll get to choose a new loan repayment term. If you pick a longer loan period, you’ll make more (but smaller) monthly payments. This can free up room in your budget for other essentials.

The drawbacks of student loan refinancing

While refinancing can save you money and help you pay off your loans faster, it isn’t right for everyone. Here are some of the downsides of refinancing with a private lender.

• You’ll lose access to federal student loan protections. If you’re on track to receive student loan forgiveness at the end of your loan term, refinancing is likely not for you. You’ll lose access to these benefits—along with other federal protections and hardship programs—if you refinance with a private company.

• You may see a small credit impact. When you apply to refinance, the lender will perform what’s called a “hard credit inquiry.” This occurs when they pull your credit report to get a glimpse at your financial history. A hard credit inquiry can result in a temporary credit score drop of up to five points.   

• You’ll have to meet stricter eligibility requirements. Refinancing companies often require borrowers to have good credit history and a steady income. If you do not meet these requirements—or if you have a high level of debt relative to your income—you may need to refinance with a cosigner⁸.

• Your loan cost may increase, even with lower rates. If you extend your repayment term, you’ll also increase the amount of time you’ll be paying interest. That means you’ll likely pay more in interest over the life of the loan, which could make your loan more expensive than if you stuck with your original rate and term. That said, if you’re struggling to make monthly payments, you may be willing to spend more on interest long-term in exchange for some breathing room in your budget right now.

Are there alternatives to student loan refinancing?

Refinancing isn’t the only way to minimize your student loan debt. Other options include:

• Income-Driven Repayment Plans. These federal payment plans cap your monthly payments at a percentage of your income, so they’ll never be more than you can afford. Caveat: They’re only available for federal student loans, and new enrollees can only choose from two programs: Income-based Repayment (IBR), and the new Repayment Assistance Plan (RAP). These plans both have long loan terms, which means enrolling could cost you more in interest over time. 

• Student Loan Forgiveness. If you work in the military, government, or public sector, you may be eligible for student loan forgiveness, including Public Service Loan Forgiveness (PSLF). This is the most reliable path to student loan forgiveness. Other paths to forgiveness—like on the IBR or RAP plan—take decades of repayment. RAP has a 30-year forgiveness timeline. IBR has a 20- to 25-year timeline. All these programs are only available for federal loans

• Student Loan Consolidation. You can bundle all your federal student loans into a single new loan with a lower payment via federal student loan consolidation. However, you cannot get a lower interest rate this way.

• Employer Repayment Assistance. Some companies will pay a portion of their workers’ student debt as an employee perk. Ask your company if they offer a student loan assistance program. If they don’t, consider this benefit during your next job search. 

• Cosigned refinancing. Some lenders (including Earnest) let borrowers refinance with a cosigner to potentially unlock lower rates and more affordable loan terms. This can be a useful option if you don’t qualify for refinancing on your own.

Am I eligible for student loan refinancing? 

You might be a good candidate for student loan refinancing if you meet the following eligibility requirements:

• You have a good credit score (or a cosigner who does)

• Your financial situation has changed significantly since you first took out your loans, and you can provide proof of steady income and employment 

• You’re not currently in school. 

• You want to pay off your debt faster, and you have the flexibility to make the higher monthly payments required to do so.

An alternative to student loan refinancing may be better for you if:

• You don’t have strong enough credit to qualify for refinancing on your own, and you don’t have a cosigner available

• You’re struggling to afford your current student loan payments 

• You’re eligible for Public Service Loan Forgiveness or another type of loan cancellation, or you intend to become eligible in the future.

• Your loans are currently in default, in which case they’re not eligible for refinancing.

See how much you could save with Earnest

Refinancing could save you a significant amount of money over the life of your loans. It can also help you get out of debt faster, streamline your repayment plan, and get back in control of your debt. If you decide refinancing is right for you, consider applying for a refinance loan with Earnest. Earnest offers a number of flexible repayment options and never charges late fees, origination fees, or any other hidden costs. Fill out an application today, and take the first step toward getting your debt under control. 

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

1 Please note that you will lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan.

2 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.

3 Payoff Path is offered by Earnest, and earning or applying benefits (if any) depends on eligibility, your financial profile, and applicable policies. Terms and conditions apply; see Earnest’s Terms of Use and Privacy Policy for full details. Offers, features, and availability are subject to change without notice.

4 Earnest clients may skip a payment through a one, one-month forbearance during a 12 month period. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time full principal and interest payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Any unpaid accrued interest may capitalize (added to the principal balance) at the end of the forbearance period by adding unpaid accrued interest to the outstanding principal as permitted by law and the terms of the loan agreement.

Interest will not be capitalized on loans originated to Michigan residents under the Regulatory Loan Act of 1963. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest's discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

5 Earnest will match up to nine months of your current grace period from your refinance date, or until your original grace period end date (whichever occurs first). Not available with the Principal and Interest Repayment plan while in school. Proof of grace and income verification required.

6 You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. 

7 You may be able to refinance your Earnest Student Loan Refinance again. To be eligible, the loan must have been disbursed more than 30 days ago, it must not be past due, and you must not be enrolled in a hardship or bankruptcy forbearance, skip a pay or any interest only repayment program. Keep in mind that a hard credit check will be required each time you refinance, which may impact your credit. Please review our Eligibility Guide & Requirements for further details.

8 Adding a cosigner does not guarantee approval or a lower rate. Loan terms depend on you and your cosigner’s credit profile and other factors. Cosigner impact varies; approval and rates not guaranteed.