6 Steps to Refinance Your Student Loans

Refinancing can provide an opportunity to renegotiate your loan terms and interest rate. Here's how the process works.

6 Steps to Refinance Your Student Loans - Young Woman Sitting at Home with Her Laptop and Paperwork

by NEA Member Benefits

Are you looking to refinance your student loans? Refinancing your student loans may help you reduce the interest rate on your student loans or your monthly payment amount or simplify your finances if you’re juggling multiple payments each month to different loan servicers.

Whatever the reason, refinancing gives you the opportunity to renegotiate your loan terms and interest rate. When you refinance, your existing loans are paid off, and then that old debt is rolled into a new private loan, typically with a lower rate and different terms.

Here are six steps you can take in the student loan refinancing process to help you improve your repayment plan.

1. Understand your loans

The first step is to know whether you have federal or private loans—or both.

You can’t refinance private loans through Uncle Sam. But you can refinance them through private lenders, such as banks and credit unions.

However, think long and hard before refinancing federal loans. One reason? You’ll miss out on any relief measures implemented to help borrowers during the coronavirus pandemic. But more importantly, by refinancing federal loans, you will no longer have access to the government’s repayment and debt forgiveness programs, such as income-based payments or the Teacher Loan Forgiveness Program. Before you do anything, see if you qualify for forgiveness by using the NEA Student Loan Forgiveness Navigator Tool.

Next, consider your goal. If your aim is to simplify your finances by going from multiple federal loan payments each month to one, you can do that by consolidating your debt into a Direct Consolidation Loan from the government. Your interest rate won’t necessarily be lower, but your monthly payments could be reduced if you stretch out the term. You also would still be eligible for important federal perks, such as income-based payments. However, if you are on track to make 10 years’ worth of on-time payments to be eligible for the Public Service Loan Forgiveness program, consolidating loans will restart the clock.

If you have private loans or if you don’t qualify for federal loan benefits, and just want to get a lower interest rate and streamline your bill paying, refinancing may be what you’re after. If you’re not sure, read about the pros and cons of refinancing.

2. Choose a reputable loan servicer

There are plenty of companies offering to help you with student loan debt, but not all are legitimate. NEA Member Benefits understands the importance of making a smart refinancing decision and wants to help reduce the complexity of choosing a lender. To protect our members and offer you a refinancing solution you can trust, NEA Member Benefits vetted and partnered with College Ave Student Loans to launch the NEA Student Loan Refinance Program.

Like many other loan servicers, College Ave will give you a 0.25% discount on your interest rate when you sign up for auto-pay1. But it also provides NEA members with a one-time statement credit equaling 0.5% of the loan—up to $599.99—on their loan balance. And College Ave doesn’t charge application or origination fees.

3. See if you qualify for refinancing

To refinance, your student loans must total at least $5,000 and cannot exceed $150,000 for undergraduate and graduate degrees. (Loan balances can be up to $300,000 for borrowers with veterinary or medical degrees). You also must be a graduate from a degree-granting college or university.

In addition, you must meet certain credit criteria. For instance, your income must be sufficient to keep up with loan payments on top of other necessities. Your debt-to-income ratio—the amount of your recurring monthly debt in relation to your monthly gross income—typically must be less than 50%, says Brian Reed, head of partnerships and business development at College Ave.

Your FICO credit score—a number designed to predict your creditworthiness—must be at least in the upper 600s. (FICO scoring ranges from 300 to 850; the higher the number the better). You can check out the likelihood that you would qualify for refinancing and at what interest rate by going to the NEA Student Loan Refinance Program page and clicking Get Started, which will take you to the College Ave website. Once youre there, click Apply at the top of the page and answer a few prequalification questions. This takes only about one minute and won’t affect your credit score. You can also get a free estimate of your credit score and advice on how to improve it at FICO’s credit education site.

4. Choose your terms

When you refinance through the NEA Student Loan Refinance Program, you can select a loan term of five to 15 years2. The longer the term, the lower the monthly payment. But a longer term means you will pay more in interest over time.

You can also choose between a fixed interest rate that stays the same throughout the term of the loan, or a variable rate that might start out lower but can rise or fall over time based on a market index. Before choosing a variable rate, make sure you are comfortable with the risk of your rate rising over time.

College Ave works with bank partners to offer competitive rates. Fixed interest rates will be slightly higher than variable rates, but in both cases, borrowers are eligible for a 0.25% rate discount if they enroll in auto-pay1. The rate you receive will also depend on your credit and the length of the loan’s term, Reed says. The shorter the term, the lower the interest rate, he says. You can check your personalized rate with College Ave without impacting your credit. 

5. Fill out a short application

Submitting an online application for the NEA Student Loan Refinance Program is fast and easy because College Ave has streamlined the process. In many cases, you won’t need to upload documentation, although some borrowers may have to provide proof of income or identity, Reed says. You’ll be asked to provide some basic information and College Ave will pull your credit report to capture your existing student loan details. Representatives at College Ave’s contact center are also available to answer any questions you have during the application process, Reed says.

You can receive a credit decision in just three minutes.

If you aren’t eligible to refinance based on your credit, you still might qualify if you can add a creditworthy co-signer to the loan. Be aware, this is a big ask. If you fail to repay the loan, your co-signer will be responsible for the debt.

6. Switch to your new loan

Once your application is approved, College Ave will pay off your old loans and provide you with a new one. You should continue making payments on your old loans until you receive confirmation that they’ve been repaid. You will receive a new repayment date on your new initial loan statement.

As a bonus, NEA members will automatically get a one-time credit worth 0.50% of their loan balance—up to $599.99. This will be applied to your balance within 60 days of the loan being added to College Ave’s servicing platform.

As an NEA member, refinancing your education loans is now easier—and faster—than ever. As you make your decisions, always make sure that refinancing won’t take away valuable benefits from your federal loans. If you determine that refinancing is right for you, you can be confident in pursuing favorable rates, flexible terms and valuable member discounts with the NEA Student Loan Refinance Program.


1The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

2This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

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