Key takeaways
- A few banks are still offering student loan refinancing, but you’ll generally find more online options from technology startups.
- Refinancing your student loans can land you a lower interest rate and more affordable monthly payments, but it may not be worthwhile for federal loans as you’ll lose valuable benefits.
- If you decide to move forward with refinancing, explore what multiple lenders have to offer and compare loan quotes to find the best deal.
Student loan refinancing involves applying for a new loan to repay your current student loans. Ideally, taking this step results in obtaining a lower interest rate or extending your repayment timeline, which can lower your monthly payment.
Refinancing can come with certain benefits, including potentially a lower interest rate, but refinancing federal student loans will cause you to lose access to the benefits offered by the U.S. Department of Education. Refinancing is a good idea if you have private student loans and can qualify for a lower interest rate than you currently pay.
Before settling on a lender to refinance with, it’s important to shop around and compare multiple offers, including banks and credit unions. Banks can be a good choice for refinancing student loans for many reasons. If you already have accounts with the bank, you may get a discount on your loan interest rate. Opting for a local bank can also provide more personalized service.
Banks that refinance student loans
If you’re considering refinancing your student loans, here are five banks to help you start your search.
Citizens Bank
Rating: 4.4 stars out of 5
4.4
Learn more in our Bankrate review
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Citizens Bank is one of a handful of student loan refinance companies that will let you refinance your debt even if you didn’t graduate. The bank offers loans ranging from $10,000 to $750,000 (the limit is $300,000 for bachelor’s degrees and below).
Repayment options are five, seven, 10, 15 and 20 years. The bank’s interest rates are competitive, and you can choose from fixed and variable rates. In addition to an autopay discount, Citizens Bank offers a 0.25 percent interest rate discount if you or your co-signer have a qualifying bank account with the lender when you apply.
Citizens Bank doesn’t disclose a minimum credit score but says you need good credit. You’ll also need to earn at least $24,000 in annual income and not have defaulted on your student loans in the past. Citizens Bank’s co-signer release period is also relatively long, at 36 months.
SoFi
Rating: 4.7 stars out of 5
4.7
Learn more in our Bankrate review
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SoFi started strictly as a student loan refinance company but received approval from federal regulators in early 2022 to become a national bank. The online bank offers loans as low as $5,000 with no ceiling. Repayment terms are five, seven, 10, 15 or 20 years.
The lender’s interest rates, both fixed and variable, are competitive. What sets SoFi apart from other lenders is its member benefits. You’ll get interest rate discounts on other SoFi loans, 15 percent off an estate plan and more.
You can refinance with SoFi if you’ve graduated with at least an associate degree, but the lender doesn’t publicly disclose any minimum requirements for credit or income. You are also not eligible if your loans were taken out for bar study or a residency.
PNC Bank
Rating: 4.3 stars out of 5
4.3
Learn more in our Bankrate review
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PNC Bank‘s student loan refinancing program may be worth considering if you don’t have a ton of debt, don’t have a degree or are unlikely to qualify for the best interest rates on the market.
PNC Bank’s lowest interest rates aren’t as impressive as those of other top student loan refinance lenders. However, its interest rate ceiling is fairly low. You can qualify for 0.5 percent off your interest rate if you set up automatic payments. The autopay discount isn’t unique, but most lenders offer only 0.25 percent.
The lender doesn’t provide concrete eligibility criteria. Still, if you need a co-signer to get approved, you can have them released from their obligation after you make 48 consecutive on-time payments and pass a credit check — a much longer waiting period than with other lenders.
Laurel Road
Rating: 4.8 stars out of 5
4.8
Learn more in our Bankrate review
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Laurel Road is an online banking brand for KeyBank, with student refinance loans ranging from $5,000 to your total outstanding loan balance. Repayment terms are five, seven, 10, 15 and 20 years.
The lender’s interest rates are competitive, and you can qualify for a discount if you have a checking account with Laurel Road and meet direct deposit and savings balance requirements. This is in addition to the 0.25 percent autopay discount.
You need to have an associate degree or higher to qualify. And if you have an associate degree, you must have earned a degree in health care.
Education Loan Finance
Rating: 4.3 stars out of 5
4.3
Learn more in our Bankrate review
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Education Loan Finance (ELFI) is the student loan refinance division of SouthEast Bank. The minimum loan amount is a bit high at $10,000, with the limit varying based on eligibility. Repayment terms include five, seven, 10, 15 and 20 years, though parents are limited to a repayment period of 10 years. The lender offers competitive fixed and variable interest rates.
ELFI does have some downsides. Namely, there’s no co-signer release program, and a bachelor’s degree is required to refinance. On the plus side, though, ELFI is more transparent than other lenders about its eligibility criteria. To qualify, you need a minimum income of $35,000, a minimum credit score of 680 and a minimum credit history of 36 months.
What is the difference between refinancing with a bank or another lender?
When it comes to refinancing your student loans, the options tend to be limited in terms of the banks you can use. While a handful of banks offer student loan refinancing, not all of them will.
So, it can be easier to find a student loan lender that will work with you to refinance your student loans instead. That said, you should try to weigh all your options — both banks and other lenders — as rates vary significantly between financial institutions. By learning what your rates, terms and other conditions are, you can make the best decision for your student loans and determine whether it makes sense to refinance.
Why don’t many banks refinance student loans?
Student loan expert Mark Kantrowitz says that many large banks no longer make or refinance private student loans because it is a small segment of their business, and it comes with additional regulations, such as private student loan disclosure requirements.
Kantrowitz notes that many large banks quit private lending and student loan refinancing after the FFEL federal student loan program ended in 2010. He says this loan program had a much larger loan volume and guaranteed profits, so its end meant there was little incentive for big banks to offer student loan refinancing products to such a limited market.
Some larger banks also tend to see auto lending as an easier way to reach recent college graduates, he says. Other banks with a large online presence may choose to focus on financial products with a much broader appeal instead, such as credit cards or personal loans.
That said, many technology startups have filled in the gaps in the student loan refinancing market, so plenty of institutions are competing in this space.
Kaitlin Walsh-Epstein, chief marketing officer of student loan company Laurel Road, says that more fintech companies refinancing student loans reflects these companies’ ability to provide exceptional digital banking services. “We expect to see fintechs continue to advance in the space, especially those with the capabilities to service today’s customer needs.”
How to refinance student loans with a bank
To refinance student loans with a bank, you’ll go through a similar process as you would with an online lender:
- Shop around. You’ll start by comparing interest rates from multiple companies, which should include banks and other lenders. Most student loan refinance companies allow you to get a rate quote with a soft credit check, making the comparison process easy and risk-free.
- Apply online. Once you decide on a lender, you’ll apply directly through its website. You’ll need to provide information about yourself, your school and your student loans. Once you submit your application, the lender will run a credit check and ask you to provide some documentation, such as pay stubs and a copy of your driver’s license.
- Accept the loan. If the lender approves your loan, you’ll receive a final offer, which may or may not be the same as the initial quote. At that point, you can decide whether or not to accept the loan. If you don’t, you can repeat the process with other lenders, but if you want to move forward with this particular lender, read the agreement and sign the documents. The lender will pay off your existing loans directly, but you’ll need to continue to make payments until that’s been confirmed.
Should you refinance with a bank?
While there can be benefits to refinancing student loans, such as obtaining a lower interest rate or extending the repayment timeline, this step should be approached carefully. Refinancing federal student loans with a private lender means losing access to benefits like income-driven repayment and forbearance.
If you refinance, obtain offers from multiple lenders, including banks or credit unions. If you have an existing relationship with a bank, you may be able to get a better deal on your student loan refinance.
