Maybe you've thought about refinancing your Sallie Mae student loan to get a lower interest rate. The only wrinkle: Sallie Mae doesn't offer student loan refinancing.
But that doesn’t mean you’re out of luck. In fact, there are lots of other lenders who can help you lower your monthly payment or save a heap of cash over the life of your loan. Here's what you need to know.
Should you refinance your private student loan?
First, let's talk about how student loan refinancing works.
Student loan refinancing is when you take out an entirely new loan to pay off your existing student loans. If your credit score has improved since you originally took out your student loans, you may qualify for a better interest rate.
The lower interest is important for two reasons:
- It can shave years off your loan payments and save you money over the life of loan. In fact, the average borrower who refinances is able to save over $16,000 over the life of their loan, or
- You can lower your monthly payments by extending the term of your loan. Many people are able to reduce their payment amounts by over $250 a month.
If you still have questions about refinancing, you might want to consider taking this 7-question quiz: Is Student Loan Refinancing Right for You?
How to refinance your student loan
1. Check your credit score
The application process for refinancing is fairly simple, but before you get started, you might want to check your credit score.
Lenders have specific criteria you must meet in order to qualify for refinancing. Most want you to have a good credit score (680 or higher), but they may also look at your employment situation and debt-to-income ratio.
Plus, the interest rate on your new private student loan will be based on your credit score. So, if it's not as high as you would like it to be, take some time to boost it up.
2. Decide how you want to save
There are a lot of lenders that would be happy to refinance your student loans for you. But know that they're not all created equal.
It's important to pick a reputable lender that will not charge you any fees to refinance your loan.
It's also smart to select lenders that will offer payments terms that fit your unique situation. For example, maybe you want to pay off your loan fast, so having a low, variable-rate loan with a five-year payment term would be a good option. Or, perhaps you want to increase your monthly cash flow by having a 15- or 20-year payoff.
Use our handy calculator to view offers from several different lenders at once.
Gather all of the necessary materials you'll need in order to complete the online application. If you have everything you need in-hand, you should be able to complete process in about 15-30 minutes.
Make sure you have:
- The most recent loan statement for each loan you want to refinance. It needs to show the loan amount—both original and current, interest rate, servicer name and address, and payoff date.
- A driver's license, passport, or bank statement that can be used to verify your address.
- Your last month's pay stub.
- Your most recent tax return.
- Proof of graduation.
You can expect a conditional loan approval within minutes. In some cases, the lender may ask you for additional documentation. It usually takes about about three to four weeks for your new lender to pay off your old loans and request the first payment.
Even though this seems quick, it's important that you continue to pay on your old loan until you receive an invoice from your new lender.
Are you ready to refinance your private student loan? Check out our Student Loan Refinancing Calculator to see how much money you could save.