Can You Refinance Student Loans? Eligibility, Process, and Cosigners

Yes, you can refinance student loans, and most borrowers with federal or private education debt qualify to do so through a private lender. The lender pays off your existing loans in full and issues a new loan in their place, ideally at a lower interest rate and with a repayment term you choose. The catch is that refinancing federal loans into a private loan is permanent, and it strips away every federal protection attached to that debt.

Who Qualifies to Refinance

Private lenders set their own approval standards, but the same core factors show up across the industry. Before applying, check yourself against these benchmarks:

Credit score around 650 to 670 at minimum, with the lowest advertised rates generally reserved for borrowers in the mid-700s and above. Some lenders will approve scores in the upper 500s if you apply with a cosigner.
Debt-to-income ratio below roughly 40 to 50 percent, calculated from your total monthly debt payments against gross monthly income.
Stable, verifiable income. Employees typically show recent pay stubs and W-2s; self-employed applicants usually provide two years of federal tax returns.
A completed degree from an accredited school. A few lenders accept borrowers who attended but did not graduate.
U.S. citizenship or permanent residency. Some lenders accept non-citizens with a qualifying cosigner.
A minimum loan balance, commonly between $5,000 and $10,000.

Fixed rates on refinanced student loans currently start around 4 percent for the strongest applicants using autopay and can exceed 10 percent for higher-risk profiles. For comparison, federal Direct Loans disbursed between July 1, 2025, and June 30, 2026, carry fixed rates of 6.39 percent for undergraduates, 7.94 percent for graduate students, and 8.94 percent for PLUS Loans.¹ Refinancing tends to pay off for borrowers whose credit and income have improved significantly since the original loans were issued.

Most lenders let you check estimated rates through a soft credit pull that does not affect your score, so you can compare offers before formally applying.

When You Should Not Refinance

Refinancing federal loans is irreversible. Once a private lender pays off your federal debt, you cannot undo the transaction or reclaim federal benefits. Several situations make refinancing a poor fit:

You work, or plan to work, for a qualifying public service employer. Public Service Loan Forgiveness cancels the remaining Direct Loan balance after 120 qualifying monthly payments while employed full-time by a government agency or 501(c)(3) nonprofit. Only Direct Loans qualify, so refinancing permanently disqualifies the debt.²³
You rely on income-driven repayment. Federal IDR plans cap your monthly payment at a percentage of your discretionary income and forgive any remaining balance after 20 or 25 years. Private lenders do not offer equivalent programs.⁴
Your income is unstable. Federal loans offer deferment and forbearance during qualifying hardships, including unemployment and economic hardship. Private lenders may offer short-term hardship programs, but these are discretionary.⁵
You hold subsidized loans with remaining benefits. On federal subsidized loans, the government pays accruing interest during deferment. Refinancing converts that debt into unsubsidized private debt that accrues interest on the full balance from day one.
You might qualify for federal discharge. Federal loans can be discharged if you become totally and permanently disabled, if your school closed while you were enrolled, or in other specific circumstances. Private lenders are not required to offer equivalent provisions.⁶

There’s also a difference in how collection works if things go badly. On defaulted federal loans, the government can garnish wages administratively without a court order, though the process comes with statutory caps and procedural protections. A private lender must sue and win a judgment before garnishing wages, a different process with its own risks.

Refinancing generally makes sense for borrowers with private student loans, borrowers whose credit is strong enough to secure a meaningfully lower rate, and borrowers with stable income who do not anticipate needing federal safety nets.⁷

If You Only Want to Simplify Federal Payments

Private refinancing is often confused with federal Direct Consolidation, but the two do different things. A Direct Consolidation Loan combines multiple federal loans into a single federal loan while keeping every federal protection, including access to income-driven repayment and PSLF.⁷

Consolidation will not lower your rate. It creates a weighted average of your existing rates, rounded up to the nearest one-eighth of a percent. If simplifying payments is your only goal and you want to preserve federal benefits, consolidation is the tool for that job. If you want a lower rate and you’re comfortable giving up federal protections, private refinancing is the tool for that one.

How the Refinancing Process Works

Once you’ve decided to move forward, gather these documents before you apply:

Your Social Security number and a government-issued photo ID.
Your most recent 30 days of pay stubs and the last two years of W-2s or 1099s. Self-employed applicants should have two full years of federal tax returns.
Current loan details for each debt you want to refinance: outstanding balance, interest rate, and servicer name, plus a note of whether each loan is federal or private. Check your billing statements or your servicer’s online portal.
Proof of graduation, such as a diploma or transcript, if the lender requests it.

Enter exact payoff amounts on the application rather than rounded estimates. If the new loan does not fully cover an old balance, a small residual debt can stay behind with the original lender.

After you submit a formal application, the lender runs a hard credit inquiry that may cause a small, temporary dip in your score. If approved, you receive Truth in Lending Act disclosures showing the annual percentage rate, total finance charge, and amount financed.⁸ You have 30 days to accept. Common term options are 5, 10, 15, and 20 years.

After you sign the promissory note, federal law gives you a three-business-day window to cancel without penalty. No funds move until that window closes.⁹ The new lender then pays off your previous servicers directly, which typically takes two to four weeks. Keep making payments to your old lenders until you get written confirmation that each account shows a zero balance. If a payment crosses with the payoff, the old servicer will usually refund the overpayment.

Most refinancing lenders charge no origination or application fees. Confirm this in writing before signing.

Fixed or Variable Rate

Fixed rates stay the same for the life of the loan. Variable rates are tied to a benchmark (often SOFR) plus a lender margin, and they usually start lower but can rise. Variable can save money on a short payoff timeline; fixed makes more sense over 10 or 15 years. If you’re considering variable, ask how often the rate adjusts and whether there is a cap on how high it can go.

Applying With a Cosigner

If your credit or income doesn’t meet a lender’s standards on its own, a cosigner can help you qualify and may unlock a lower rate. The cosigner takes on equal legal responsibility. Missed payments will show up on both credit reports, and the lender can pursue the cosigner for the full balance.

Some lenders offer cosigner release after a stretch of on-time payments, commonly 24 to 48 consecutive months, provided you meet the lender’s credit and income standards on your own at that point. Not every lender offers release. If it matters to you, confirm the specific requirements in writing before signing.

What Refinancing Does Not Change

The student loan interest deduction still applies. Federal tax law treats a loan used to refinance qualified education debt as itself a qualified education loan, so interest on your new private loan remains deductible if the underlying debt was originally taken out for qualified higher education expenses.¹⁰

The maximum deduction is $2,500 per year and phases out at higher incomes based on your modified adjusted gross income and filing status.¹¹ You do not need to itemize to claim it. Your new lender will send a Form 1098-E each year you pay $600 or more in interest.¹²

1
Federal Student Aid. Interest Rates for Direct Loans First Disbursed Between July 1, 2025, and June 30, 2026
2
eCFR. 34 CFR 685.219 – Public Service Loan Forgiveness Program
3
Federal Student Aid. Public Service Loan Forgiveness
4
Federal Student Aid. Income-Driven Repayment Plans
5
eCFR. 34 CFR 682.210 – Deferment
6
Consumer Financial Protection Bureau. What Happens to My Student Loans if I Die or Become Disabled
7
Consumer Financial Protection Bureau. Should I Consolidate or Refinance My Student Loans
8
eCFR. 12 CFR 226.46 – Special Disclosure Requirements for Private Education Loans
9
eCFR. 12 CFR 226.48 – Limitations on Private Education Loans
10
Office of the Law Revision Counsel. 26 U.S. Code 221 – Interest on Education Loans
11
Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction
12
Internal Revenue Service. About Form 1098-E, Student Loan Interest Statement