Student Loan Consolidation and Refinance

Student Loan Refinance and Consolidation Companies

Michael Lux Blog, Consolidation, Student Loans 0 Comments

We are currently tracking 13 different lenders providing student loan refinancing and consolidation services.  As we become aware of additional lenders, they will be added to our list.  For each company we have included the latest interest rate information, available loan terms, borrower bonus information and a brief review along with our rating.

RankLenderInterest RatesSign-Up BonusLoan AmountsApplication
1SoFi2.47% – 7.979%$150$5,000 – No MaxApply
SoFi Review: SoFi consistently offers the best actual interest rates to applicants. Combine that with SoFi's unique job placement program for borrowers and you have a winner.
2LendKey2.51% – 9.81%$150$5,000 – $300,000Apply
LendKey Review: LendKey partners with local banks and credit unions to provide their loans. The end result is competitive rates provided by local reputable businesses.
3ELFI2.55% – 6.69%$150$15,000 – No MaxApply
ELFI Review: ELFI has the best interest rates around. Even though ELFI is new, it is the product of a regional bank that has been in business for decades.
4Laurel Road3.05% – 7.02%$150$5,000 – No MaxApply
Laurel Road Review: Even though Laurel Road does not advertise the lowest rates, they frequently offer the best rate to borrowers who shop around. Laurel Road also has a specialized program for medical professionals.
5CommonBond2.50% – 7.25%$150$5,000 – $500,000Apply
CommonBond Review: CommonBond has quickly established itself as one of the top lenders available. The interest rates offered are among the best and customer satisfaction appears to be very high.
6Splash Financial2.96% – 7.01%Up to $2,000$7,500 – $300,000Apply
Splash Financial Review: Splash has competitive rates, but they start slightly higher than the top lenders. Splash also offers unique 8 and 12 year repayment terms.
7EDvestinU4.25% – 7.89%$200*$7,500 – $200,000Apply*
EDvestinU Review: EDvestinU scores points for transparency and low interest rates on 15 and 20 year loans, but we have a couple concerns.
8citizens bank2.82% – 9.33%$200*$10,000 – $350,000Apply*
Citizen's One Review: Citizen's Bank (also called Charter One) is one of the few traditional banks left in the student loan refinance marketplace. Citizen's may be an unremarkable option, but is still a solid choice and worth a comparison shop.
9Earnest2.57% – 6.99%$200*UnknownApply*
Earnest Review: The rates advertised by Earnest are among the best, but in head to head comparisons, Earnest often falls short in actual rates offered. Earnest scores points because it has by far the most flexibility on loan repayment length.
10Alliant Credit Union Refinancing3.75% – 6.75+%Max $100,000Apply
Alliant Review: Alliant is a highly regarded Credit Union. Unfortunately, their student loan refinancing options don't match the high quality of their other banking products.
11Purefy2.82% – 7.69%$200*$10,000 – $350,000 Apply
Purefy Review: Purefy's options are someone what limited as they do not offer a variable-rate loan and have a maximum repayment length of 15 years while most other lenders offer 20. Purefy seems to excel at medium length fixed-rate loans.
12Connext3.97% – 9.85%$200*$10,000 – $250,000Apply*
Connext Review: Connext interest rates start out low but most loans will have higher rates. Connext is a decent option but most borrowers will be able to do better elsewhere.
13College Ave3.13% – 7.99%$200*$5,000 – $250,000Apply*
College Ave Review: College Ave loses points because the maximum repayment length is only 15 years and some of their loans are serviced by Navient. That being said, the interest rates are very competitive with other lenders.
14U-Fi2.82% – 7.69%$10,000 – $350,000Apply
U-Fi Review: One the positive side, U-Fi is one of the very few lenders that offers a 25 year term to repay your loan. The downside is that they only offer it as a variable-rate loan, which is a lot of time for interest rates to go up.
15PNC Refinance4.98% – 7.59%$10,000 – $75,000Apply
PNC Review: PNC has the best rates of the National Banks offering student loan refinancing, but PNC doesn't stack up to the student loan startups, regional banks, or credit unions.
16MEFA4.45% – 6.95%$200*$10,000 – No MaxApply*
MEFA Review: MEFA doesn't have the best rates on the market, but if you are specifically looking for a 15-year loan, MEFA is very competitive. For shorter or longer loans, it is best to look elsewhere.
17Wells Fargo5.24% – 9.99%$5,000 – $120,000Apply
Wells Fargo Review: Wells Fargo is the last of the big-name institutions still offering student loan refinancing and consolidation. Unfortunately, the rates offered are just not competitive with the other lenders in the market.
18iHelp4.00% – 9.89%$200*$10,000 – $250,000Apply*
iHelp Review: iHelp falls short due to limited repayment plan options and higher rates than the competition.
196.73% – 34.12%$2,000 – $35,000Apply
Prosper Review: Prosper may be a good option for a personal loan, but is a bad choice for student loan refinancing. Origination fees and high interest rates make a Prosper loan an expensive route to refinance your student loans.

If you are aware of additional student loan refinance companies, please let us know.

What services do student loan refinancing companies provide?

The basic service that all student loan refinancing companies provide is student loan repayment at lower interest rates.  Beyond that, the service can vary greatly from one company to the next.  For example, SoFi attempts to be at the center of a borrowers financial life.  In addition to refinancing your student loans, they offer mortgage services, personal loans, and investment services.  They even provide career counselors to help borrowers who need help finding a better job.

However, for most refinancing companies, other than the basic student loan refinance, borrowers should not expect much more.

Picking a student loan consolidation lender

For most borrowers, the primary objective is locking in a lower interest rate on the new loan.  However, it is important to note that the advertised rate of a student loan refinance company is often different than the actual rate offered to the consumer.  The best advertised rates typically got to those who have excellent credit scores and debt-to-income ratios.  For the majority of borrowers, the key to finding the best rate is to shop around, check your rate with a number of refinance companies and pick the one that offers the best actual rate.

Other important considerations when picking a student loan refinance company include the terms of the contract and customer service quality.  If you have a co-signer, you will want to make sure the terms of the agreement are favorable to your co-signer.  If you are an entrepreneur, or someone whose income can fluctuate greatly, you will want to pick a lender whose terms more flexible.  As for customer service, you want to pick a lender with helpful representatives, who provide accurate information, and short wait times.  Our student loan reviews page attempt to incorporate these factors as much as possible.

What types of companies offer student loan refinancing and consolidation?

In the past, this service was provided only by the large banks and other financial institutions.  Over the past five years we have seen a dramatic growth in the number of lenders providing refinance and consolidation services.  These new lenders, for the most part, are not part of a traditional bank.  Instead, these are startup companies relying upon investor funding to provide loan services.

There are also several nationwide student loan refinancing lenders that are affiliated with smaller regional banks and credit unions.

What is the difference between student loan consolidation and student loan refinancing?

These terms are often used interchangeably.  A student loan refinance is when a new lender pays off an existing student loan for a borrower.  The borrower repays the new lender according to the terms of the new loan.  The idea is that the debt amount doesn’t change, but the interest rates are more favorable to the borrower.

Student loan consolidation is when the new lender pays off multiple student loans, possibly with multiple old lenders.  Instead of the borrower owing money to many different companies, the debt is now with one new lender.  Here again, the idea is that the borrower gets a better interest rate with the new lender.

How do student loan consolidation companies make money?

If a lender pays off a high interest loan and has the borrower pay back the debt at a lower interest rate, how do they make money?

The key to answering this question is looking at the risk.  When you first borrower student loans, you have no job, degree, and likely no income.  When you are working with a student loan consolidation company, you are now employed, have a degree, income, and a higher credit score.  This less risky lending means lower interest rates can be offered and still be profitable.

What should I expect from my Student Loan Refinance Company?

Once you pick a lender and agree to terms, the student loan consolidation process begins.  Your student loan consolidation company may ask you for payoff statements from your lenders, or they may directly connect with your lender to pay off your existing balance(s) in full.  This process can take days or weeks, depending upon the student loan companies involved.

When all of the necessary funds have been transferred from your new lender to your old lenders, you begin repayment according to the terms of the new borrower agreement.