Refinancing replaces your current student loans with a new private loan at a (hopefully) lower rate. It can save thousands—but only if you qualify for a better rate and don’t need federal loan protections.
Current Student Loan Refinancing Rates (2026)
| Credit Score | Fixed Rate | Variable Rate |
|---|---|---|
| 780+ (Excellent) | 4.9-6.2% | 4.5-5.8% |
| 720-779 (Very Good) | 5.5-7.0% | 5.0-6.5% |
| 670-719 (Good) | 6.5-8.5% | 6.0-8.0% |
| 580-669 (Fair) | 8.5-12.0% | 8.0-11.0% |
Compare to current federal loan rates: 5.50% (undergraduate), 7.05% (graduate), 8.05% (PLUS).
How Much Can You Save by Refinancing?
Example: $50,000 in Loans at 7% Over 10 Years
| Scenario | Rate | Monthly Payment | Total Interest | Total Paid | Savings |
|---|---|---|---|---|---|
| Current (7%, 10 years) | 7.0% | $581 | $19,668 | $69,668 | — |
| Refi to 5% (10 years) | 5.0% | $530 | $13,639 | $63,639 | $6,029 |
| Refi to 5% (7 years) | 5.0% | $707 | $9,363 | $59,363 | $10,305 |
| Refi to 4.5% (5 years) | 4.5% | $931 | $5,842 | $55,842 | $13,826 |
Example: $100,000 in Loans (Law/Medical School)
| Scenario | Rate | Monthly Payment | Total Interest | Savings |
|---|---|---|---|---|
| Current (7%, 10 years) | 7.0% | $1,161 | $39,336 | — |
| Refi to 5% (10 years) | 5.0% | $1,061 | $27,278 | $12,058 |
| Refi to 5% (7 years) | 5.0% | $1,414 | $18,726 | $20,610 |
When to Refinance Student Loans
Good Candidates
| Scenario | Why Refinance Makes Sense |
|---|---|
| Private loans at high rates | No federal protections to lose; lower rate saves money |
| Federal loans you’ll pay off in full | You won’t use IDR or PSLF; lower rate = pure savings |
| High income, strong credit (720+) | You qualify for the best rates |
| Large balance ($50K+) | Even a small rate reduction saves thousands |
| Multiple loans | Simplify to one payment |
Bad Candidates (Don’t Refinance)
| Scenario | Why Not |
|---|---|
| Pursuing PSLF | Refinancing makes federal loans private—you lose PSLF eligibility |
| Need income-driven repayment | Private loans have no IDR options |
| Might need forbearance/deferment | Federal protections are more generous |
| Credit score below 670 | Rate offered may not be lower than current rate |
| Close to forgiveness | Don’t restart the clock |
| Unstable income | Federal protections are your safety net |
What Lenders Look At
| Factor | What They Want |
|---|---|
| Credit score | 670+ (some require 680-700+) |
| Income | Stable, sufficient to cover payments |
| Debt-to-income ratio | Below 50% (ideally below 40%) |
| Employment | Employed or have a signed offer letter |
| Degree | Completed degree (some lenders require this) |
| Cosigner | Can help if you don’t qualify alone |
Fixed vs. Variable Rate
| Feature | Fixed Rate | Variable Rate |
|---|---|---|
| Rate stays the same | Yes—for entire loan term | No—changes with market |
| Starting rate | Higher | Lower |
| Best for | Long loan terms (7-20 years) | Short terms (3-5 years) |
| Risk | None | Rate could increase significantly |
| Predictability | Monthly payment never changes | Payment can increase |
Rule of thumb: Choose fixed if your term is 7+ years. Consider variable only if you’ll pay off within 5 years.
The Bottom Line
Refinancing makes sense when you can get a rate at least 1% lower than your current rate and you don’t need federal loan protections like PSLF or IDR. On $50,000 in loans, a 2% rate reduction saves $6,000-$14,000 depending on the term. Always compare at least 3-5 lenders and check your prequalified rate (soft pull) before applying.