How To Refinance Your Student Loans — Step-By-Step

Many students, especially physicians, often take out multiple private and federal loans to fund their schooling.

These loans come with a hefty interest that you may need to continue paying for many years after graduating.

One way to lower your interest rate and save money is to refinance your student loans. There are multiple ways to do this and many private lenders to choose from.

We’ll cover everything you need to know to make the best choice for your needs.

Key Takeaways

  • Student loan refinancing can help you lower your interest rate, reduce monthly payments, and get out of debt sooner.
  • A decent credit score of 640 or higher improves your chances of getting lower interest rates for refinancing.
  • It’s not recommended to refinance your loans if there’s little time left on your current repayment terms.
  • When refinancing federal loans, you’ll forfeit your federal student loan benefits.

What Is Student Loan Refinancing?

Student loan refinancing involves taking a loan from a private lender to replace your original student loan.

This refinanced loan comes with a new interest rate and terms, typically much lower than the first one.

Who Is Eligible to Refinance Student Loans?

Generally speaking, you’ll need the following criteria to qualify for refinancing:

  • A credit score ranging from mid-to-high 600s (usually at least 640)
  • A DTI (debt-to-income) ratio below 43%
  • A steady source of income

However, each lender has their own set of eligibility criteria that you have to follow.

An excellent way to know if you’re eligible for student loan refinancing is to pre-qualify, which many lenders offer for free.

They usually have online loan calculators where you enter basic information and get a semi-accurate prediction of your refinanced loan terms.

5 Steps for Refinancing Your Student Loans

1. Decide If Refinancing Is Your Best Option

The first thing you need to do is decide if a student loan refinance is the right choice for you.

You can get out of debt earlier and make lower monthly interest payments, but only if you get a good deal from the lender.

Look at your credit reports and credit score to find out how likely you are to qualify.

If your FICO score is 640 or higher, there’s a good chance you might qualify for refinancing without needing someone to cosign with you.

If your FICO score is low, you can improve your credit before applying for student loan refinancing.

You must also consider your current loan type, the time remaining on your loan term, and your current interest rate vs. your monthly payments.

When in doubt, financial advisors can help you make the best decision and tell you how to manage your physician debt.

Pros of Refinancing

  • Lower Interest: The main point of refinancing your student loans is to get a lower interest rate, which means you’ll pay less total interest if you stick to the same period.
  • Smaller Payments: If your current monthly payments have become unmanageable, refinancing can help you make smaller payments without extending your repayment terms.

Cons of Refinancing

  • Loss of Key Benefits: When refinancing federal student loans, you lose federal protections such as income-driven repayment (IDR) plans and federal loan forgiveness.
  • Timing: Refinancing is a bad idea if you’re nearing the end of your repayment terms.

2. Improve Your Credit Score

Having a decent credit score can make you eligible to refinance medical school loans.

The better your credit score is, the better interest rate you could get.

That’s why it’s a good idea to improve your credit score as much as possible before applying for private loans, even if you’re already eligible.

Here are a few tips to help get your credit score in shape.

Pay Your Bills

One of the best ways to improve your credit score is to always pay all your monthly bills on time.

This includes credit cards, loans, utility bills, and other monthly obligations.

Avoid late or missed payments as much as possible because payment history significantly impacts your FICO score.

Improve Your DTI Ratio

Your debt-to-income ratio is a simple comparison of your income to the debt you need to pay monthly.

It helps lenders determine whether you’ll be able to stick to your monthly repayment terms in the long run.

Divide your monthly debt payments by your gross monthly income to get your DTI ratio.

For example, let’s say you pay $800 for your mortgage, $200 for your car, and $350 for your student loan. This means your monthly debt payments are $1,350 in total.

If your monthly income is $2,500, you’ll get a DTI ratio of 54% if you divide your debts by that number.

The higher your DTI score, the less likely you are to get reasonable rates for refinancing.

That’s why improving your DTI ratio before refinancing medical school loans is a good idea.

There are only two ways to lower your DTI ratio:

  • Increase your income: For example, if you get a work bonus, side gig, or tax refund.
  • Lower your debt: You can lower your debt by using any extra money to pay off some of your debt in addition to your monthly loan payments.

However, before choosing one of the two approaches, you should decide whether your priority is to pay off your debt or invest to increase your income.

Both approaches will lower your DTI ratio, but investments can make you more money in the long run.

Add a Co-Signer

If you’ve just graduated or haven’t had any real income yet, you likely don’t have a solid credit history.

One way to improve your credit score on applications, such as when applying for student loan refinancing, is to add a co-signer.

A co-signer is usually a relative, such as a parent or sibling, with a good credit score, a stable source of income, and a low DTI who applies for the loan with you.

They act as a guarantee and share your payment responsibilities. In other words, if you fail to make student loan payments, they must pay for you instead.

Having a co-signer might not directly improve your credit score, but it lowers lenders’ risk and makes you a more attractive candidate when applying for refinancing.

3. Research Lenders

Once you’ve decided to refinance your student loans, the next step is to research and come up with a list of lenders that could finance you.

When choosing the lender, some of the things you should consider include:

  • Will they offer a fixed or variable interest rate?
  • Do they let you co-sign with others to improve your chances of approval?
  • Will they offer simple or compound interest?
  • Do they offer incentives or bonuses when you refinance your student loans?
  • Do they offer flexible payment options and work with your current situation?
  • What do past borrowers and online reviews say about this lender?

Popular Student Loan Refinancing Companies

  • LendKey
  • Education Loan Refinance (Elfi)
  • EdvestinU
  • INvestEd
  • MEFA
  • Citizens
  • SoFi
  • Credible

4. Compare Lenders’ Loan Offers

After compiling a list of multiple lenders, you’ll need to shortlist at least three of the best ones for your needs and compare their rates.

Each lender might advertise a specific rate on their website, but getting a personalized quote is better to see how much you would actually pay.

They’ll usually ask you to provide basic information, such as:

  • Name and address
  • University degree
  • Total student loan debt
  • Income
  • Monthly debt and housing payments

Using this information, the lender will run a soft credit check to see if you pre-qualify.

This check won’t affect your credit score, but it will help lenders decide what interest rate to give you, so you can choose which offer to take.

The interest rates depend on whether the term lasts for 5, 7, 10, 15, or 20 years.

You can also choose between variable and fixed interest rates.

Variable-rate loans fluctuate with the market, while fixed rates are constant throughout your repayment term.

If you choose long-term repayments, a fixed-rate loan is a safer bet.

5. Submit Your Application

To lock in your new interest rate, you’ll need to complete your application and upload multiple documents to the lender’s website.

A typical student loan refinance application can include:

  • Government-issued ID, such as a passport or a driver’s license
  • SSN (social security number)
  • Proof of income, such as a job letter offer or a pay stub
  • An official statement for each of your private or federal student loan

Your statement includes all the details of your private or federal loan payments, such as your original balance, how much you’ve paid to date, and your average monthly payment.

Your current lender can provide a copy of your entire loan history.

If you have a co-signer, they’ll need to provide all of this information, as well.

Remember to keep paying your current loans until the new lender approves your application.

Then, you can transfer your monthly payments to the new lender.


Student loan refinancing is an excellent way to lower your interest rates, save money, and eliminate your debt quickly, but only when done correctly.

If you’re unsure whether it’s the right choice for you or feel you could use some advice, contact PhysicianThrive’s team of experts, and we’ll help you get closer to your goal of achieving financial freedom.

Frequently Asked Questions

How Long Would It Take To Refinance My Student Loan?

It depends on your lender, but most applications take 1-2 days to process.

After that, it could take a couple of weeks to transfer your payments to the new lender and set everything up.

To be safe, expect about three weeks for refinancing your student loans.

Can I Refinance Federal Student Loans?

Yes, lenders have multiple options for refinancing student loans, whether private or federal.

However, remember that federal loans have many benefits that private student loans don’t, such as income-driven repayment plans and Public Service Loan Forgiveness (PSLF).

Can I Keep My Student Loans Under Someone Else’s Name?

Yes, some private lenders let you transfer your loans to someone else when refinancing, provided they’re related to you and have sufficient income and credit score.

How Many Times Can I Refinance My Student Loans?

There’s no limit to refinancing your student loans as long as you meet the eligibility criteria each time you apply.

However, remember that refinancing multiple times can be redundant, especially as interest rates increase.

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