How to Refinance a Consolidated Student Loan

Refinancing your student loan can save you money on interest when rates drop.
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Consolidation combines one or more student loans into one new loan for the entire balance. If you have consolidated your student loans into a single loan, there are ways to refinance. The type of refinancing depends on the lender and your own credit history and financial situation. For example, you can reduce your monthly payments by extending the new loan over a longer term than the original, but you may pay more in total interest.

Credit Score

Unless interest rates have changed significantly since your consolidation, you might want to wait to refinance until you have improved your credit score. It may not be worth the hassle and refinancing fees if the circumstances are still the same and you don't get a better much rate on your loan. To improve your credit score, pay off your credit cards and other personal debts. Check your credit history and look for any possible errors that could be bringing down your score. Contact the credit reporting agency to correct any errors you find.

Interest Rates

Get the current interest rates from your lender to find out if refinancing will be affordable. Interest rates for student loans are usually based on credit score, so the lender will have to run your credit before quoting a final rate. Federal student loan rates change every year on July 1st. If you are refinancing a private loan, compare rates from various lenders to get the best deal. Be sure the risk is acceptable if you choose a variable rate. There is no guarantee you will be able to refinance to a lower rate before your loan adjusts.


Contact the lender of your choice for refinancing application forms. Select a fixed or variable interest rate and the term of the loan repayment. Pay the required credit check and application fees and provide the financial information requested by your lender, such as bank statements or pay stubs. Wait for the lender to review your case and approve or deny your application.


If you are able to obtain financing from another source, it might be better to take out a home equity loan or other secured loan and pay off the student loan with the proceeds. Secured loans typically offer lower interest rates than student loans. You might be able to lock in a favorable fixed rate instead of having to worry about an adjustable rate that is out of your control. Interest on home loans is also tax-deductible.

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