You can refinance student loans without a degree, but it may not be easy. That’s because lenders commonly require student loan refinance borrowers to graduate.
While you may get student loan refinancing offers that don’t require a degree, the terms might not beat what you have now, especially if you have federal student loans. Here is how to get the best deal if you’re trying to refinance student loans without a college degree, plus alternatives to refinancing.
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To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For student loan refinance companies, we consider each company’s customer service ratings, refinancing fixed APR, refinancing variable APR, refinancing minimum and maximum loan terms, refinancing maximum loan amounts, refinancing minimum FICO score, product availability, and online features.
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Splash Financial is a student loan refinancing marketplace that uses its network of banks, credit unions and other lenders to match borrowers with refinancing options. Splash Financial is based in Cleveland and can help U.S. citizens and permanent residents refinance federal, private and Parent PLUS loans. Splash Financial also offers a specialized refinance program for doctors and dentists completing residencies and fellowships.
Earnest is an online lender offering private student loans to college and graduate students, as well as student loan refinancing. The company was founded in 2013. Borrowers can choose their own loan terms to fund up to the full cost of their education.
Citizens Bank was founded in the late 1800s in Rhode Island. Today, it’s one of the largest commercial banks in the U.S. Branches are concentrated in the New England, mid-Atlantic and Midwest regions.
Founded in 2014, Purefy is a student loan refinance rate comparison site, and it also originates refinanced student and parent loans via a partnership with Pentagon Federal Credit Union. As a rate comparison tool, Purefy shares interest rates and terms from lending partners, including Earnest, ISL Education Lending and College Ave. This lender review will focus on the loan refinancing options Purefy and PenFed offer together.
Sparrow, founded in 2020, is an online marketplace where students and parents can fill out a single application to see whether they qualify for loan offers from a variety of lenders. Although Sparrow is not a lender, the free service allows you to compare rates across lending partners. Sparrow is also available to international students.
PNC offers student loans in all 50 states for students at all stages of postsecondary education, including professional training loans and refinancing. The bank is also engaged in a number of community efforts, including financial literacy programs and PNC Grow Up Great, which supports early childhood education. For eligible undergraduate students, PNC offers opportunities to win $2,000 scholarships toward education expenses.
Best for comparing rates on student loan refinancing from local lenders
Lend-Grow is an online lending marketplace founded in 2019 that matches borrowers with local lenders in its network. The Reston, Virginia, business partners with small and midsize banks and credit unions that compete to give borrowers low student loan refinancing rates. Private and federal loans from $5,000 to $750,000, including Parent Direct PLUS loans, can be refinanced.
Credible is a loan comparison marketplace that allows would-be borrowers to shop around for loans that meet their needs – including mortgages, mortgage refinancing, student loans, student loan refinancing and personal loans. The company was founded in 2013 in San Francisco as a tool to empower borrowers to shop rates and products.
Best for no fees
Discover Bank has been operating for more than 100 years, and since 2010, it has offered private student loans to students attending more than 2,400 colleges and universities. Loans of up to 100% of education costs with fixed or variable rates are available.
Find the Best Student Loan Refinance Lenders
When you refinance a student loan, you combine some or all of your student loans into a new loan, giving you one payment and ideally a lower interest rate, a lower monthly payment or both.
You can refinance private student loans through private lenders and roll up federal student loans into a federal direct consolidation loan. Refinancing federal student loans into a private student loan is also possible, but it generally isn’t a good idea because you’ll give up the benefits and protections that come with federal loans.
An important one is the COVID-19 loan payment pause that has been extended through Aug. 31, 2022, for eligible federal loans. The relief measure suspends loan payments, sets interest rates to 0% and stops collections on defaulted loans.
“Yes, you can refinance student loans without a degree,” says Robert Farrington, student loan expert and founder of The College Investor personal finance blog.
Some, but not all, private lenders will refinance student loans for borrowers who haven’t graduated, though you shouldn’t expect the best terms, Farrington says.
While you may not have a plethora of lenders to choose from, it doesn’t hurt to see what kind of rates you’re offered, says Jan Miller, president of Miller Student Loan Consulting.
“Always look into your options,” Miller says. “But before you pull the trigger, make sure it’s not going to put you in a more difficult position or give up your federal safety net.”
Eligibility criteria to refinance student loans without a degree can be strict, Farrington says. For example, the lender may want to see that you’ve had 12 months of on-time payments after leaving school or may require a co-signer.
Generally, private lenders will assess your income, credit history, debt obligations and other factors, such as degree completion, to determine whether you are a good credit risk.
Qualifications to refinance with a private lender when you didn’t graduate are:
- A good credit score of about 650.
- Proof of employment and stable income. Some lenders have minimum annual income requirements.
- A maximum debt-to-income ratio of 43%, but lower is always better. Your DTI ratio is the percentage of your gross monthly income that goes to monthly debt payments.
Requirements to consolidate federal student loans are not credit-based, and most types of federal student loans are eligible.
Accepting a loan offer without researching it is one of the biggest mistakes borrowers make when refinancing student loans, Miller says. But how do you know a good student loan refinance offer when you see one?
- Monthly payment: Will your new monthly payment work with your budget now and in the foreseeable future? “Be certain that you’re stable enough financially that you can afford this payment through the rest of the term,” Miller says. “If you have any reservations, don’t do it.”
- Interest rate: Look for the loan that will cost you the least in interest over time, but try not to be driven solely by interest rate, Miller cautions. A lower interest rate doesn’t necessarily mean a lower monthly payment, he says. You could be moving from a 25-year repayment term to a 10-year term, which will make your monthly payment rise even if you’re paying less interest overall. A higher payment could stretch your limits of affordability.
- Consumer protections: Ask about the safety nets that come with your new loan, including options for deferment, forbearance and discharge. If you’re moving from federal to private student loans, be certain that you’re OK with giving up federal protections and benefits.
Once you’ve compared offers, choose the loan that works best for you. But don’t stop there: Be ready to refinance again soon because private student loan terms change often and a better deal may become available.
Set a calendar reminder every six months to check student loan rates, Farrington says. Student loans typically don’t have prepayment penalties or origination fees, so it shouldn’t cost you anything but time to shop for a lower rate.
- Lower interest rates. By refinancing your student loans, you may qualify for a lower interest rate. Whether you go for a variable or a fixed loan, you’ll generally get a better rate than the one you currently have. Refinancing lenders are offering rates that start around 2% for borrowers with excellent credit and a reliable income.
- Pay the debt off faster. You’ll have the option to adjust how long you want your repayment term to be. By shortening the repayment period, you’ll be able to pay the debt off quicker – even years ahead of schedule; however, you can expect your monthly payments to be larger.
- Decrease your monthly payment. On the other hand, you could decide to extend your loan term, which would decrease the amount you need to pay monthly. Keep in mind that this could potentially increase the total amount of interest you’ll pay on the loan over time.
- Simplify your loans. Refinancing acts as a form of student loan consolidation, simplifying the management of your loans. If your student loans came from multiple lenders, they will combine into one loan under one lender that has one monthly payment after refinancing.
- New loan servicer. You’ll have the chance to choose a new loan servicer – which is great if you aren’t happy with your current one. To find the right servicer for you, research lenders with high rankings.
- Chance to release a co-signer. If you previously had a co-signer, you will have the chance to release him or her from future liability when you refinance your student loans.
- No income-based repayment plans. When you refinance your federal student loans into a private loan, you lose the chance of choosing an income-driven repayment plan.
- No federal repayment protections. Along with losing access to income-based repayment plans, you’ll also lose out on protections such as forbearance and deferment, which allow you to pause or lower your monthly payments if you find yourself in an economic hardship.
- No grace period. You will no longer have a six-month grace period for your student loans. If you just refinanced, you’ll have to start repaying immediately.
- Possibly higher interest rates. Interest rates can go up if you choose a variable rate, rather than a fixed rate. Variable rates often start lower, but they can fluctuate depending on multiple factors.
- A co-signer may be required. Lenders require a good credit score as well as sufficient income. If you don’t qualify, you may need to find a co-signer on your refinanced loan.
Refinancing your student loans if you didn’t graduate isn’t always the best choice. Once you research loan offers, you may find that a student loan refinance doesn’t add up in your favor.
These are some other options:
- Modify your federal student loans. Retain the protections of federal student loans, but change your payment terms. You could switch to an income-driven repayment plan or extend your terms from 10 years to 25 years.
- Ask your lender for flexibility. Your lender may be able to offer temporary assistance, such as forbearance, a lower interest rate, interest-only payments or other flexible terms, especially if you can demonstrate a hardship.
- Apply for forgiveness or discharge programs. You may be eligible for a closed school discharge or Public Service Loan Forgiveness, which doesn’t require a degree.
- Use employer-sponsored student loan repayment benefits. Generally, you can take advantage of these whether or not you graduated, Farrington says.
- Pay off the highest-rate loan first. Pursue forbearance or other assistance, Miller says, to lower your federal student loan payments and devote more of your budget to paying down higher-rate private loans.
- Think about going back to school. If you enroll at least half-time, you can put your loans in deferment and complete your degree to increase your earnings. Just be sure the cost is worth the outcome, Farrington says.
- Consult an expert. You might need advice that goes beyond what a lender’s customer service agent can offer. Assistance from a student loan consultant can help you understand your options.
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