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Curious if now is a good time to refinance your student loans? Here's who should and shouldn't

Private student loan borrowers may want to refinance today, but federal borrowers should not.

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The majority of student loan borrowers — about 92% — hold federal loans issued by the government. That leaves private student loan borrowers making up a small sliver of the overall student debt pie.

Which type of borrower you are is important because it makes all the difference when it comes to deciding whether now is a good time to refinance your student loans.

Both federal and private student loan borrowers are able to refinance their loans. When you refinance your loans, you trade in your current student loan(s) for a completely new loan through a private lender. Refinancing allows you the opportunity to combine your multiple monthly student loan payments into just one, while also ideally scoring a lower interest rate and a new loan term that works best for your financial situation.

With interest rates still relatively low right now, now may be an ideal time for private student loan borrowers to consider refinancing. On the other hand, federal loan borrowers who are waiting for their up to $20,000 in debt forgiveness to process and have their payments and interest on freeze through Dec. 2022 probably shouldn't.

Here's what you need to know about refinancing student loans in today's market.

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Federal student loan borrowers: Do not refinance right now

If you're a federal student loan borrower, do not refinance at this time.

The suspension of federal student loan payments and interest that has been in effect since the CARES Act passed in March 2020 means that federal borrowers have had their interest rate set to zero. Generally, you choose to refinance in order to get a lower interest rate so it wouldn't make sense given 0% is already the lowest it could be.

If you can afford it, making payments today while rates are at 0% helps you pay down your principal balance faster. But if you hold off on payments, 0% interest means your balance won't grow over time.

When student loan payments eventually resume again, federal student loan borrowers should still proceed with caution before choosing to refinance. Refinancing your federal student loans through a private lender (since you cannot refinance through the government) causes you to lose access to any government protections that you once had.

Such protections include forbearance and deferment options, income-driven repayment plans and student loan forgiveness programs. Those who refinance their loans through a private lender are no longer eligible for any student loan forgiveness.

Private student loan borrowers: Consider refinancing right now

Consider refinancing if you're a private student loan borrower paying a too-high interest rate. Although they've been rising, federal loan rates are still relatively low, which means that many private lenders have followed suit and also lowered their interest rates, as well.

But low rates won't last forever: Though private lenders set their own rates, they're influenced by the Fed's prime rate. The Fed will again raise rates and refinancing may not be as cheap.

Now is, therefore, an ideal time for private student loan borrowers to consider refinancing and take advantage of the low rates before they rise again. If your credit score is better than when you last applied for a private student loan, you're in even better shape to qualify for a low rate.

APRs on refinanced student loans currently range from 3.22% to 13.95% fixed and 1.29% to 12.99% variable. As you shop around for a private lender to refinance through, use their prequalification tools before applying to see what rates you're eligible for without hurting your credit.

You can also use loan marketplaces like Credible to compare lenders. With rates at historic lows, you may want to choose a lender that offers fixed APRs so you can lock in the low rate and know it won't ever change over the entire duration of your loan term.

Select analyzed and compared private student loan funding from national banks, credit unions and online lenders to rank your best options for borrowers. We rated our top student loan refinance companies and all offer low, fixed refinancing rates:

SoFi 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 and fixed

  • Variable rates (APR)

    5.74% - 9.99% (rates include a 0.25% autopay discount)

  • Fixed rates (APR)

    4.99% - 9.99% (rates include a 0.25% autopay discount)

  • Loan terms

    5, 7, 10, 15, 20 years

  • Loan amounts

    From $5,000; over $10,000 for medical/dental residency loans

  • Minimum credit score


  • Minimum income


  • Allow for a co-signer


See our methodology, terms apply.


  • No application or origination fees to refinance
  • 0.25% autopay discount already applied
  • Soft credit pull when you prequalify
  • No prepayment penalties
  • Protections include: Unemployment protection (forbearance offered in 3-month increments, capped at 12 months), Covid forbearance of payments for a minimum of 90 days if experiencing financial hardship, loan deferment if going back to school, SoFi honors first 6 months of pre-existing grace period on loans looking to be refinanced
  • Offers $100 monthly payments during residency
  • SoFi has its own Career Advisory Group to help members look for new employment
  • Access to live customer support 7 days a week
  • SoFi members get career coaching, financial advice from planners, plus more for free
  • Unique member benefits like receive a 0.125% interest rate discount on any additional SoFi lending product
  • Offers up to $310 bonus referral program


  • No co-signer release option available
  • Loan size minimum of $5,000; over $10,000 for medical/dental residency loans

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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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