Am I eligible to refinance my student loans?

Help! I'm in Danger of Student Loan Default


Struggling to repay your student loans? You’re not the only one.

While the national student loan default rate has fallen from 11.8% in 2015 to 11.3%, according to the Washington Post, hundreds of thousands of borrowers are still failing to make payments.

Student loan default in a nutshell

Default happens when you’ve failed to repay your loan – and it can impact your financial well-being for the rest of your life.

After 270 days of not making a payment, your federal student loans will be in default. Private student loans are even less forgiving. Typically, most private loans go into default once you miss three monthly payments. You should always review the terms and conditions of your promissory note to ensure you understand how your lender or loan servicer will handle such situations.

What does this mean for people unable to repay their student loans? A lot. Because it’s incredibly rare for student loans to be discharged in bankruptcy (there’s a handful of cases on the books, but as a general rule, it doesn’t happen), defaulting on your student loans can plague you for years. Your credit will be damaged, your wages may be garnished, Social Security benefits and lottery winnings may also be reduced, and you may be ineligible to receive additional federal financial aid funds. You can even be sued.

There’s a host of consequences you may be hit with for not staying current on your student loan payments. Defaulting may also come back to haunt you when you try to buy a home or make other large purchases.

Nip student loan default in the bud

One of the best ways to avoid default is to be proactive. If you find you’re struggling, don’t give up! Explore your options. There are several things you can do to keep your head above water. Here are a few good places to start.

Find a repayment plan that works for you

If you’re consistently struggling to make your monthly payments, it’s time to take another look at your repayment plan.

Federal student loans have plenty of repayment plans to choose from, giving you anywhere from 10 to 30 years to repay your loan depending on how your payments are structured. Repayment options for private student loans vary by lender, but most range from 7 to 15 years, with some offering extended terms up to 30 years.

Switching to a more affordable plan could be the thing that keeps you out of default, so if your plan just isn’t cutting it, contact your lender or loan servicer ASAP to find a better fit.

Let’s talk consolidation and refinancing

If you need a long-term solution, consider consolidating or refinancing.

Consolidation bundles all of your existing loans into one, with only one monthly payment to keep track of. This can also reduce your payment by extending your repayment term. If you choose to refinance, you’re looking at a "two birds, one stone" approach where you not only lower your monthly payment (through an extended repayment term), but you can also potentially shave points off your interest rate. Consolidating or refinancing could be a way to not only stay out of default, but make your monthly payment more affordable.

Yes, you might spend more money in the long run, but is it worth it to stay out of default? Absolutely. You may have new life expenses creeping in, like childcare or home repairs, and consolidating or refinancing are viable options to help you manage your debt in a manner you can live with.

Lowering your payments can also free up money to put toward other, more expensive debt, like a high-interest credit card. Most refinancing and all federal loan consolidation options allow for early repayment without any penalties, so even if the term of your loan is extended, you may be able to pay more than what’s required to pay down your student debt faster as you get your finances in order and (fingers crossed!) you begin earning more money.

What’s the real difference?

A Direct Consolidation Loan is available for federal education loans only. This program combines your existing federal education loans into one, with a weighted interest rate. If you go this route, you don’t have to consolidate all of your federal student loans. If you happen to have a federal student loan that is almost paid off, or has a really low interest rate, you don’t have to include it in the Direct Consolidation Loan.

Refinancing, on the other hand, allows you to take out a new private loan to pay off one or more existing loans, and you can include federal or private student loans, or both. When you refi private student loans, you can consolidate your debt, lower the cost of your monthly payment, and even get a better interest rate. If you decide to refinance your federal loans through a private lender, you’ll be sacrificing the deferment, forbearance, and other repayment programs the government education loans offer, but if you feel your income is steady and those low interest rates are calling to you, it’s an option worth exploring.

Again, eligibility requirements, interest rates, and repayment options will vary by lender, so do your research to find the best one for you.

Take a break

If you’re going through a tough time and know you won’t be able to make a payment for a few months (or more), see about getting a deferment or forbearance. Both will temporarily suspend or reduce your payments, giving you a chance to get back on your feet without risking default. (You may also want to look into income-driven repayment plans such as Income-Based Repayment.)

What is a deferment or forbearance?

A deferment is a temporary - key word here - suspension of your payments on a student loan. Most federal loans are eligible for deferment under certain conditions, like during periods of unemployment or being enrolled in school at least half-time.

If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans). So, even if you’re not making payments toward your principal loan balance, it may be worth it to pay interest as it accrues so you’re not overwhelmed when it’s added to your total balance after your break is over.

If you want to learn more about deferment and forbearance programs, check out Tackling Repayment: Deferment, Forbearance, and Other Options on our Resources page or visit Federal Student Aid to see if you’re eligible for deferment or forbearance.

Options for private student loans aren’t as crystal clear. Most private lenders or loan servicers give a deferment while you’re in school at least half-time, typically allowing you a grace period of a few months after you graduate before you’re required to begin making payments. Some offer forbearance or other periods of deferment for tough times, but it’s not guaranteed for all private loans.

We’ll say it again: options and requirements will vary, so when in doubt, contact your lender or loan servicer ASAP. (Even if they seem scary, it’s better to work with them than go into default!)

Wipe the slate clean

If your debt is swallowing you whole, don’t panic – you’re not out of luck yet.

Forgiveness and discharge programs are available to cancel out your federal education loan debt, either by earning it through service in a certain career path (forgiveness) or by being granted loan discharge by your lender or loan servicer.

Forgiveness is typically earned by working or volunteering in a specific career field, such as teaching, working for the government, or serving in the military.

Discharge is granted under certain circumstances, like having your school close, or becoming permanently disabled. Federal student loans offer various routes for loan forgiveness and discharge, but, unfortunately for non-federal borrowers, discharge options tend to be stricter, and there are no loan forgiveness options available for private student loans.

It can get tricky. Check out this article on discharge and forgiveness for more information.

It’s a tradeoff

Paying off your student loans isn’t "one size fits all." For some, repayment may be as simple as locking in a standard repayment plan for the next X number of years. For others, it might be a little tougher – and that’s okay. Whether you need to change your repayment plan, consolidate your loans, or find another way to get back on solid ground, default doesn’t have to be the answer.

Ready to take the first step? Learn more about your eligibility to refinance your loans and see how much you can save with our student loan consolidation calculator.

Learn More About Student Loan Refinancing

Private Student Loan Refinancing Interest Rates

Private Student Loan Refinancing Interest Rates

The interest rate on a private refinance loan is determined by the borrower's or cosigner's credit rating. See the impact of different rates on payments.

Federal Student Loan Consolidation Interest Rates

Federal Student Loan Consolidation Interest Rates

When you consolidate your federal student loans, your interest rate will be roughly the same as your current loans. See an example of the rate calculation.

Pros and Cons of Refinancing Parent Loans

The Pros and Cons of Refinancing Parent PLUS Loans

Many parents take out student loans to pay for a child's college education. Learn about the pros & cons of refinancing Parent PLUS Loans & private loans.

How Student Loan Consolidation Works

How Student Loan Consolidation and Refinancing Works

Wondering what the first steps are in consolidating or refinancing your student loans? Check out these step-by-step instructions on how to get started.

Lending Partners

Interest Rates
  • Fixed as low as 3.25% APR
  • Variable as low as 2.72% APR
Max. Loan Limits Up to $300K
Min. Loan Amount $7,500 Degree Req. Must hold at least a bachelor's degree Repayment Terms 5, 8, 12, or 15  years.
Interest Rates
  • Fixed as low as 5.74% APR1
  • Variable as low as 4.99% APR1
  • Lowest APRs shown include an Auto Debit Reward
Max. Loan Limits
  • $150K - Undergraduate or Graduate degrees
  • Higher limits may apply for specific fields of study
Min. Loan Amount $5,000 Degree Req. Students with loans from eligible schools may apply. Repayment Terms 10 - 20 years
Interest Rates
  • Fixed rates starting at 3.39% APR
  • Variable rates starting at 2.8% APR
  • Lowest APRs reflect autopay and loyalty discounts where available.

No maximum loan limit

Min. Loan Amount $7,500 No degree required to refinance Repayment terms 5, 7, 10, 12, 15, 20, +more
Interest Rates
  • Fixed rate range 3.25% – 7.25%1
  • No origination fees
  • No prepayment fees
Max. Loan Limits
  • Consolidate and refinance up to $300,000
Min. Loan Amount $5,0003 Reset Refinance Loan available to both parent and student borrowers. Repayment terms 5 – 20 years
Interest Rates
  • Fixed as low as 3.20% APR
  • Variable as low as 2.48% APR
  • Hybrid loan rates as low as 3.79% APR
  • Lowest APRs offered include an auto-pay discount
Max. Loan Limits Up to $500K
Min. Loan Amount $10,000 Degree Req. Required completion of one of the following degrees at a qualified school:
  • MBA
  • JD
  • MD
  • Engineering
Repayment Terms 5, 10, 15, 20 years
Interest Rates
  • Fixed from 3.49% - 8.92%
  • Variable from 2.67% - 8.91%
  • Lowest APRs offered include an auto-pay discount
Max. Loan Limits
  • $125K - Undergraduate
  • $250K - Graduate
  • $300K - Medical, Dental, Veterinary
Min. Loan Amount $5,000 Degree Req. Graduated from a LendKey eligible school Repayment Terms 5, 7, 10, 15, and 20 years
Interest Rates
  • Fixed as low as 3.37% APR
  • Variable as low as 2.35% APR
  • Lowest APRs offered include an auto-pay discount
Max. Loan Limits No Maximum
Min. Loan Amount $10,000 Degree Req. Required completion of degree Repayment Terms 5, 7, 10, 15, 20 years
Interest Rates
  • Fixed as low as 3.74% APR
  • Variable as low as 4.50% APR
  • Rates above include 0.25% auto-debit discount
Max. Loan Limits
  • $120K
  • Minimum qualifying credit score is 660 with an eligible cosigner
Min. Loan Amount $10,000 Degree required. Must have graduated from an eligible school. Repayment Terms 5, 10, or 15 years
Interest Rates
  • Fixed rate range: 3.25% – 8.00% APR1
  • Variable as low as 2.88% – 7.63% APR1
  • No application or prepayment fees
Max. Loan Limits
  • Consolidate and refinance up to $250,0003
Min. Loan Amount $5,0003 Degree required. Must have graduated from a public or private, not-for-profit, degree granting institution. Repayment terms 5 – 15 years2
Interest Rates
  • Fixed rate range: 4.51%% – 8.20% APR1
  • Variable as low as 3.08% – 6.72% APR1, 2
  • No application, origination, or prepayment fees
Max. Loan Limits
  • Consolidate and refinance up to $250,0003
Min. Loan Amount $5,0003 Eligibility Requirements Must be a U.S. citizen or eligible non-citizen. Must not have defaulted on any private or government student loan. Repayment terms 5, 10, 15 & 20 years2
Am I eligible to refinance my student loans?