A Step-by-Step Guide to Refinancing Private Student Loans

Molly Carapiet, Head of Student Loan Refinancing, First Republic Bank
October 29, 2019

There are many student loan types, but they primarily fall into two broad categories — privately funded and publicly funded. If you have a hefty student loan balance, there’s a good chance you have both. You may even have loans with different terms, interest rates and outstanding balances.

With all this in mind, it can be difficult for a student loan borrower to decide if they’re on the right repayment path — or if a refinance could be an optimal move. This is often especially true of private loan borrowers. That’s why we created this handy step-by-step guide that can help you sift through the many details of student loan refinancing…so you can figure out the best future strategy for you.

Can I refinance my student loans?

In most cases, absolutely. Most lenders will want to make sure you have the income and credit history to make timely loan payments. It’s up to you to decide if the terms of the new private student loan — which include the new term length, interest rate, the potential for one consolidated payment and the release of a co-signer — are more attractive than your current loan situation.

Start by listing your outstanding loans.

Whether you’re looking to decrease your overall term, reduce the amount of interest you’ll pay or even just consolidate your loans to create one simple monthly payment, you’ll want to start with an understanding of the details of your current student debt load. Start with a list that includes the following:

  • The type of loan (public or private)
  • Amount owed
  • The loan’s interest rate (and whether it’s a variable or fixed rate… more on this later)
  • The loan's remaining term
  • If the loan has a co-signer

Your list may look something like this:

Student Loan

Public or Private

Amount Owed

Interest Rate



Bank Loan 1



7.81%  variable

10 years


Bank Loan 2



9.66% fixed

10 years


Direct Unsubsidized




10 years


Direct PLUS Loans




10 years


What student loan refinancers should know. 

A refinance with a bank or other private financial institution means you’re moving your debt from one financial institution to another. The new resulting student loan will likely come with a new term, different fees and a different interest rate. If you’re refinancing several loans into one new loan, it can result in one monthly payment and one single interest rate.

Get to know the details behind each of your student loans.

Next, get to know the specific benefits and terms associated with each of your individual student loans. For example:

Public versus private student loans

Public student loans typically come with certain benefits that may not be available to private student loan borrowers. These can include subsidized interest payments, income-based repayment programs, student loan forgiveness, deferment or forbearance. Find out which programs your loans include — and whether you plan to take advantage of them — before deciding whether to bundle public student loans with a private student loan refinance.

In some cases, a refinance can yield a decreased interest rate or term, which may be beneficial for public student loan borrowers. Still, a refinance will void those public loan benefits, so weigh your options carefully.

Interest rate and term variability

Student loan interest rates can dramatically differ, based on the type of loan, the year it was disbursed and the credit rating of the debtor or the borrower’s co-signer. In general, if the original term of two loans is the same, a loan with a lower interest rate will be less costly over time.

There is an exception: A variable rate loan will fluctuate over time, generally based on an underlying market benchmark like the London Interbank Offered Rate (LIBOR), which is often reflective of interest rate movement within the broader economy.

In short, the costs associated with a fixed interest rate will be easier to predict, particularly when interest rates are on the rise.

Then there is the length — or term — of the loan, which can be as short as 5 but sometimes as long as 30 years. In general, a longer term will keep a monthly payment lower but will increase the overall amount of interest paid.

Co-signer responsibilities

A co-signer is often required for a college or graduate student’s private student loan approval because most students haven’t yet built a credit history; consequently, the co-signer accepts responsibility for the loan, should the borrower default.

Many employed professionals appreciate the gift a co-signer granted and want to return the favor by releasing the co-signer from the borrower’s obligation; however, releasing the co-signer also means the primary borrower is entirely responsible for the loan repayment.

Is student loan refinancing right for you?

Ask yourself these questions if you are considering a student loan refinance:

1. Am I financially prepared to take responsibility for my student loan repayments?

Do you have full-time, stable and permanent employment? Can you afford the payments without the safety of a co-signer? Do you have enough money stashed away to cover an unexpected financial emergency?

2. Can I get a lower interest rate than the current weighted average rate for my existing student loans?

A weighted average rate calculation is an effective way to boil down the existing amount of student debt you owe, as well as the amount you’re paying for that debt. Math whizzes can calculate the number themselves, but a First Republic Bank private banker will be happy to run a quick calculation as well. The goal is to see if you qualify for a new student loan rate that’s lower than your current weighted average.

3. Is my credit rating solid enough to qualify for attractive student loan refinance rates?

Those with the most solid credit ratings will qualify for the most attractive loan programs. Your bank may offer a free monthly credit score service. If it doesn’t, you can gain access to your report once per year from each of the nation’s three major credit reporting agencies.

In general, credit scores fall into the following categories:

  1. 750+: Excellent
  2. 700-749: Good
  3. 650-699: Fair
  4. 600-649: Poor
  5. Below 600: Bad

4. Will a student loan refinance serve me in the long term?

Will a student loan refinance1 allow you to pay off your loan(s) sooner? Will you save a good chunk of change by refinancing to a lower interest rate? Does the potential new loan program offer any other beneficial perks, like a financial reward for early payoff?

5. What is the process for refinancing my student loans?

Often, the process can be quite simple. A short application can help a lender determine the rate for which you may qualify. Then you’ll likely need to provide some documentation to validate your identity, income and savings. Finally, you’ll be given 10-day payoff instructions so your new lender can send a check to your old lender.

Evaluate your lender options.

Not all lenders are created equal, and a little work upfront will help you answer these questions when picking a lender:

  1. Who will give me the best rate? Locking one of the lowest interest rates on your loans could lower your monthly payments and could save you big on interest during the life of the loan.
  2. Who will give me the terms that I care about? Knowing if your lender offers special benefits like financial incentives for early repayment or no loan origination fees helps you compare beyond the lowest rates.
  3. Who will help me achieve all of my financial goals? Paying back your student loans is just the start of your financial future. Consider which lender will help you beyond that with milestones like buying a home, funding your child’s education or planning for retirement.
  4. Who will provide me with a high level of customer service? Having a single point of contact at your financial institution makes for quick, reliable and accurate responses when you need to speak with someone.
  5. Who has a proven track record? Decades of consistent, positive performance is often an indicator of a lender’s focus on longevity and its long-term ability to remain stalwart, even during tough economic times.

Ready to get started? Use this student loan refinance calculator to discover what your new loan options could be.

Refinance your student loans – fixed rates as low as 1.95% APR with discounts.

1. Terms and conditions apply. The terms of this loan may differ from your current loan(s). For example, this loan does not contain special features such as forbearance periods or income-based repayment plans available for some student loans. This loan may not be dischargeable in bankruptcy. This product is not available in all markets. For a complete list of locations, visit firstrepublic.com/locations. This is not a commitment to lend or extend credit. Contact your legal, tax and financial advisors for advice on deciding whether this is the right product for you. 

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of Use.