Refinancing 30 March 2023

The 6 Best Banks to Refinance Student Loans Right Now

From traditional banks to online lenders, learn more about the best banks that refinance student loans in our comprehensive guide.

Table of Contents

If you are feeling burdened by your student loan debt, you can consider refinancing. Refinancing allows you to combine multiple loans into one new loan with a lower interest rate, which can save you money in the long run and also make it easier for you to manage the lenders. The best banks to refinance loans are those that provide competitive rates, flexible repayment options, and outstanding customer service.

We have reviewed the 6 best banks to refinance student loans for the current year so that you can make an informed decision.

What is Student Loan Refinancing?

Student loan refinancing means taking out a new loan to pay off existing ones. The reason students choose to refinance loans is that it can reduce the interest rate and the monthly payments, giving them a breather from the debt.

6 Best Banks to Refinance Student Loans

LenderScholaroo ratingFixed rates starting (APR)Variable rates starting (APR)

SoFi

Great for Competitive Interest Rates

Visit website		4.5/54.995.38

Citizens Bank

Helpful for Free Coaching & Advice

Visit website		4.7/55.395.09

Discover

Good Cash Reward Program

Visit website		4/55.995.49

Laurel Road

Best Choice Overall

Visit website		4.9/54.994.74

College Ave

Fast Approval Process

Visit website		4.6/55.995.99

PenFed

Great for Members of the Military

Visit website		3.9/57.74N/A
Lender

SoFi

Great for Competitive Interest Rates

Scholaroo rating
4.5/5
Fixed rates starting (APR)
4.99
Variable rates starting (APR)
5.38
Visit website
Lender

Citizens Bank

Helpful for Free Coaching & Advice

Scholaroo rating
4.7/5
Fixed rates starting (APR)
5.39
Variable rates starting (APR)
5.09
Visit website
Lender

Discover

Good Cash Reward Program

Scholaroo rating
4/5
Fixed rates starting (APR)
5.99
Variable rates starting (APR)
5.49
Visit website
Lender

Laurel Road

Best Choice Overall

Scholaroo rating
4.9/5
Fixed rates starting (APR)
4.99
Variable rates starting (APR)
4.74
Visit website
Lender

College Ave

Fast Approval Process

Scholaroo rating
4.6/5
Fixed rates starting (APR)
5.99
Variable rates starting (APR)
5.99
Visit website
Lender

PenFed

Great for Members of the Military

Scholaroo rating
3.9/5
Fixed rates starting (APR)
7.74
Variable rates starting (APR)
N/A
Visit website

#1 SoFi

Great for Competitive Interest Rates

Apply now

SoFi

4.5
Scholaroo Rating
Apply now
Fixed Starting APR4.99%
Variable Starting APR5.38%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

SoFi is a leading nationally chartered bank that offers refinancing on competitive rates and flexible repayment options and provides access to exclusive benefits such as career coaching, financial advice and even events for members.

Pros and Cons

Pros

  • SoFi offers low interest rates
  • Terms up to 20 years for lower monthly payments
  • No origination fees or prepayment penalties
  • Exclusive benefits for members

Cons

  • It does not offer co-signer release option
  • Limited to a few States only
  • Maximum loan amount is $500,000 per borrower
  • Has a credit score limit of 660

Eligibility Requirements

  • Must be a US citizen or permanent resident
  • Must have at least one year of verifiable employment history
  • Must have at least one active loan to refinance
  • Must be 18 years of age or older
  • Must have a minimum credit score of 660
  • Must have graduated or completed an eligible program within the past five years
  • Must have no delinquencies on any student loans during the last 12 months

#2 Citizens Bank

Helpful for Free Coaching & Advice

Apply now

Citizens Bank

4.7
Scholaroo Rating
Apply now
Fixed Starting APR5.39%
Variable Starting APR5.09%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

Citizens Bank is one of the best banks to refinance student loans. It offers fixed and variable rates along with repayment options and the best part is that it has no origination fees and no early payment penalties. The bank also offers additional benefits for its customers such as free career advice from experts in the field, no-cost financial literacy resources, and discounts from select brands.

Pros and Cons

Pros

  • Citizens Bank offers competitive fixed and variable interest rates
  • It has no origination fees or prepayment penalty
  • It gives free career advice from experts in the field and no-cost financial literacy resources
  • Also has discounts from select brands

Cons

  • The offers are not available in all states
  • It has limited loan terms options and a few repayment options
  • Higher credit score requirements than other lenders
  • Good rates and terms are reserved for students with excellent credit scores (750+)

Eligibility Requirements

  • Must be a U.S. Citizen or Permanent Resident
  • A minimum credit score of 660 (depending on product)
  • Verifiable income and employment history
  • Have at least $25,000 in eligible education loan debt
  • Must not have any delinquencies or defaulted loans in the past 12 months
  • Must be able to meet repayment obligations without undue hardship
  • Must not have discharged student loan debt through bankruptcy or any other hardship arrangement within the last 5 years
  • All borrowers must attend an eligible school and program of study

#3 Discover

Good Cash Reward Program

Apply now

Discover

4
Scholaroo Rating
Apply now
Fixed Starting APR5.99%
Variable Starting APR5.49%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

Discover is an online lending bank that provides various student loan options including refinancing. It has good interest rates along with flexible terms. The bank also provides benefits and auto-pay discounts of up to 0.25% along with a cash reward program on qualifying student loan payments.

Pros and Cons

Pros

  • Discover has no origination fee or prepayment penalty
  • A cash reward program that allows you to earn 1% cash back on qualifying Discover Student Loan payments
  • Competitive interest rates and flexible repayment terms
  • Auto-pay discount of up to 0.25%

Cons

  • Not available for cosigners guarantors
  • It is limited to a few States
  • The loan term options are limited
  • Good rates are provided for borrowers with 750+ credit scores

Eligibility Requirements

Must be a U.S. Citizen or Permanent Resident
Minimum of $5,000 in eligible student loan debt
A minimum credit score of 660 (depending on product)
Verifiable income and employment history
Must not have any delinquencies or defaulted loans in the past 12 months
Must be able to meet repayment obligations without undue hardship
All borrowers must attend an eligible school and program of study

#4 Laurel Road Bank

Best Choice Overall

Apply now

Laurel Road Bank

4.9
Scholaroo Rating
Apply now
Fixed Starting APR4.99%
Variable Starting APR4.74%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

Laurel Road Bank is another one of the best banks to refinance student loans. It is well known for its refinancing options for student loans providing easy solutions. It provides many services including free credit score tracking, budgeting tools, and personalized guidance. Laurel Road Bank has earned high satisfaction ratings and is a great option for all borrowers.

Pros and Cons

Pros

  • Laurel Road provides free guidance and budgeting tools
  • No application or origination fees
  • Competitive interest rates and flexible repayment terms
  • Highest satisfaction ratings by existing customers

Cons

  • It has limited loan amounts available for refinancing compared to other loan companies
  • Not all lenders or loans are eligible to be refinanced with Laurel Road Bank
  • Limited customer service options available
  • Not all professional organizations qualify for additional benefits

Eligibility Requirements

  • Must be a US citizen or permanent resident
  • At least 18 years of age
  • Have at least $5,000 in eligible student loan debt
  • Must have graduated from an accredited school with either an Associate’s, Bachelor’s, Master’s, or Doctoral degree
  • Not in default on a loan
  • Have steady employment or income source
  • Have a minimum credit score of 660, though higher scores may be required for certain loan products
  • Must not have filed for bankruptcy within the past two years and must demonstrate excellent repayment history for the last 12 months

#5 College Ave

Fast Approval Process

Apply now

College Ave

4.6
Scholaroo Rating
Apply now
Fixed Starting APR5.99%
Variable Starting APR5.99%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

College Ave Student Loans is also a great solution for borrowers that need to refinance their student loans. It offers flexible repayment terms and competitive rates, making it easy for you to manage debt. They also have additional benefits such as no application or origination fees and quick approvals.

Pros and Cons

Pros

  • College Ave has some of the most competitive rates on the market
  • It provides several repayment options including fixed and variable interest rate loan terms ranging from 5-20 years
  • College Ave can approve applications in as little as 15 minutes
  • It has no application or origination fees

Cons

  • Not available for International students
  • Not all eligible degrees are covered making it difficult for all students to get approved
  • Not all loan types eligible for refinancing
  • They need mandatory employment verification in order to approve a loan, which can be a problem for self-employed or unemployed students

Eligibility Requirements

  • Must be a U.S. citizen or permanent resident
  • Must have received an eligible degree from an accredited university
  • Must have at least $10,000 in student loan debt to refinance
  • Must be employed and able to provide employment verification
  • Minimum credit score of 660 to apply
  • No delinquencies or defaults on your credit score in the past 2 years
  • Must be 18 or older to apply
  • Maximum loan amount of $150,000
  • Must have no more than 90 days late payments in the last 24 months prior to application date
  • Minimum age requirement is 18 years old for all states except Alabama and Nebraska, where it is 19
  • Income must be at least $24,000 per year for single borrowers or $45,000 annually for joint borrowers

#6 PenFed Credit Union

Great for Members of the Military

Apply now

PenFed Credit Union

3.9
Scholaroo Rating
Apply now
Fixed Starting APR7.74%
Annual Fee$0
Credit score660
Why We Like ItPros and ConsEligibility Requirements

Why We Like It

PenFed Credit Union is a credit union that specializes in offering financial services to members of the military and their families. It also offers student loan refinancing services to help borrowers save money on their student loans and simplify their repayment plans.

Pros and Cons

Pros

  • PenFed offers competitive interest rates
  • It has a variety of repayment options and no origination fees
  • It has a dedicated customer service that can help answer questions
  • It’s a great option for members of the military and their families

Cons

  • Only available to members of the military and their families, so not everyone can qualify for refinancing
  • They need a minimum credit score of 660
  • Borrowers must have a debt-to-income ratio of less than 50%
  • PenFed does not offer any income-driven or extended repayment plans, making the options limited for borrowers

Eligibility Requirements

  • Must be a member of the military or a family member of a current or former service member
  • Must have a minimum credit score of 660
  • Must have a debt-to-income ratio of less than 50%
  • Must be a U.S resident or permanent resident alien
  • Must have at least one student loan to refinance
  • Must be at least 18 years old and have a valid Social Security number
  • Cannot be in default on any student loans
  • Must provide proof of insurance for all refinanced loans
  • Must have sufficient income to cover the monthly loan payments
  • Must not have any delinquent accounts in the past 24 months
  • Must not have any bankruptcies or foreclosures in the last 7 years

Steps to Refinance With a Bank

Following are the steps for refinancing student loans with a bank.

  1. Compare lenders: Always shop around and compare the offers from different lenders. Get a rate quote with a soft credit check from multiple banks to find the one with the lowest interest rates and favorable terms.
  2. Apply online through the bank’s website: Once you have compared lenders and chosen the best one for you, go through the application process on their website and collect the required documents and relevant information mentioned on their site. The application asks for your personal information and also takes information reading your school and any loans that you may have. Upon submitting the application, there will be a credit check conducted and some additional documentation may be required.
  3. Accept the offer:  Upon getting the final offer, check the terms and conditions and the rates being offered as they may differ from your initial offer. If you are happy with the offer then read the agreement and sign the offer to get your loan refinanced.

Alternatives to Refinancing

There are always other options available in case you don’t qualify for refinancing or simply don’t want to follow that path. Here is a list of things you can choose from:

  • Loan Consolidation: Loan consolidation allows you to combine multiple loans into one loan, potentially reducing your monthly payments or extending the term of your loan.
  • Repayment Plans: There are different repayment plans to choose from that can be tailored to your individual financial situation including PAYE, or Income-Driven.
  • Loan Forgiveness Programs: You can apply for loan forgiveness to get rid of your student loan debt.
  • Scholarships and Grants: There are many scholarships and grants available to students that can help pay off a chunk of their debt to make the rest more manageable.

Before you decide which option to opt for,  it is good to do thorough research on all the options available so you can choose the right financial plan that fits your needs.

FAQs

Will a bank refinance a student loan?

Yes, many banks refinance student loans. Some of the best banks to refinance student loans include Laurel Road, Citizens Bank, Discover, and Sofi.

Which is the best bank to refinance student loans?

There are 6 great options suggested for banks to refinance student loans but the Laurel Road is the best choice overall with the highest Scholaroo rating.

What are the risks of refinancing student loans?

Refinancing student loans has its benefits like reduced interest rates and easier lender management however, It also has risks and some disadvantages. Refinancing your loans can increase the total amount of interest you have to pay over the life of the loan, and you could also end up paying out-of-pocket costs or origination fees. Furthermore, refinancing federal student loans may result in you losing certain benefits associated with the original loan such as deferment, forbearance, and public service loan forgiveness. Ensure that you study all the benefits over risks before making final decisions.

Is it difficult to refinance student loans?

Refinancing student loans is not very difficult or complicated. It all depends on your individual circumstances and whether or not you qualify for refinancing with a lender. If you meet their criteria including credit score and employment requirements along with others it can be a simple process.

When should I refinance my student loans?

The ideal time for refinancing is when you have a good credit score, a steady income, and a low debt-to-income ratio. Good credit scores will get you better rates from lenders and you can also enjoy flexible terms.

Does refinancing loans hurt credit?

Initially, refinancing can hurt your credit score. However, in the long run, if you make on-time repayments, it can actually help give a boost to your credit score.

Can student loans still be forgiven if you refinance?

Refinancing federal student loans with private lenders makes them ineligible for forgiveness.

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