Is Student Loan Refinancing Right for You?

  Molly Carapiet, Eagle Lending, Director of Operations, First Republic Bank Young professionals with large student loan balances are often stuck between a rock and a hard place. If you’re currently managing student debt, you’ve probably been hearing about the option to refinance your education loans. But how do you know if refinancing is right for you? Although every borrower has a unique financial situation, below are a number of questions to ask yourself to help you decide if student loan refinancing is right for you:

Why should I refinance?

Recent graduate school alumni have seen loans with rates in the six to eight percent range. Those with the strongest credit histories can potentially lower their existing rate by several percentage points, consequently decreasing their monthly payments — particularly in an environment with historically low interest rates that may not stay that way for long. In addition, you’ll be able to maintain one balance in one place.

What should I think about prior to refinancing?

Choosing to refinance means you’re likely to lose some features associated with your existing student loans, including various income-driven repayment plans (such as IBR, REPAYE, PAYE, and ICR) where the amount due each month is tied to your income instead of student loan balance. While these programs may eventually wipe out some student loan debt, these programs may often extend the term of your loan to 20–25 years and/or the amount of interest you pay. If you don’t expect to take advantage of income-driven repayment, deferment options or forgiveness provisions, you might not miss having them.

When is the right time to refinance?

You have excellent credit. Demonstrating responsible credit management with a FICO score of 750 or above puts you in a better position to qualify for refinancing. It’s also essential that your current student loans are in good standing and not in deferment or forbearance. You earn an adequate income. A consistent income is a good signal of your ability to make on-time loan payments, especially when you have significant debt to repay. If you are self-employed or have other sources of income, you may need to provide additional documents. You have some money saved up. Showing an ability and willingness to save money is a good way to demonstrate responsible money management. Particularly important is showing evidence of short-term savings with enough liquidity for life’s unexpected expenses. Prepare for refinancing by building a small nest egg – a practice that will also help you practice establishing a healthy financial future.

Putting it all together

If the above situations ring true for you, refinancing your student loans with First Republic1 could be a good fit. To learn more about refinancing with First Republic, check out our website or reach out to Dolly Meas Cooper at Of course, it’s always recommended that applicants contact their legal and financial advisors for assistance in deciding whether a particular product is right for them.   1 This is not a student loan. The terms of this product may differ from the terms of your current loan. For example, this product does not contain special features such as forbearance periods and income-based repayment plans available for student loans. Applicants should discuss loan terms and conditions with their banker and contact their legal and financial advisors for advice on deciding whether this is the right product for them. Applicants for student loan refinancing must be located within close proximity to our offices, which are primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City.  Not all loans or products are available in all states. For a complete list of locations, visit our locations page or contact a First Republic banker.  
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