I’m Not Eligible for Student Loan Refinancing — Now What?

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The U.S. student loan pause has been extended through June 2023, but 93% of borrowers aren’t fully prepared to hit restart on their loan payments. A survey from the Student Debt Crisis Center reveals one in three borrowers are reducing spending on food, rent and healthcare as preparation for repayments.

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Student loan debt continues to be a major barrier in achieving financial independence for millions across the country. This debt also impacts a disproportionate amount of people — including women. Women carry between $30-50k in student loan debt, according to a recent GOBankingRates survey of more than 1,000 women in the United States.

One approach to reduce student debt is refinancing student loans. Refinancing helps borrowers get lower interest rates on their loans and makes it easier for borrowers to make repayments. However, refinancing opportunities are often contingent on factors like a good credit score and steady income.

What if you want to refinance your loans, but you are not eligible for refinancing? GOBankingRates chatted with Chris Ebeling, the Head of Student Lending at Citizens, about when it makes sense to refinance student loans and available options for those who may not be eligible.

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Why Refinance Student Loans? 

Refinancing student loans allows borrowers to take advantage of lower interest rates to potentially lower their total monthly payment. A lower monthly student loan payment makes a big difference in your budget. The extra cash from refinancing student loans may be put towards savings or you can put it towards any other debt reduction goals.

Ebeling said that before refinancing, you want to compare the features and benefits of your existing loans to that of your new loan. 

“When you refinance, you waive any current and future benefits of your federal loans and replace those with the benefits of your new refinanced loan,” said Ebeling. 

What does private student loan refinancing look like? Ebeling said that while refinancing for private student loans may offer potentially lower rates and monthly payments, it does not include benefits unique to refinancing federal student loans. Some of these benefits include income-driven repayment plans and loan forgiveness. 

“Remember that you can choose to refinance your federal and private student loans separately,” said Ebeling.

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I’m Not Eligible for Refinancing — What Are My Options? 

If you’re not eligible for refinancing, Ebeling recommends the following options to student loan borrowers.


“Consolidation will combine all of your loans into one loan, at a new interest rate that is the weighted average of your previous loans, allowing borrowers to simplify their cash flow and payment process,” said Ebeling. 

Consolidating student loans, which may only be done with federal loans, does not change your interest rate. Rather, it averages all your rates together. While the interest rate may not change, consolidation makes it easier to manage your payments in one or two places. 

If borrowers decide to consolidate their federal loans, they may do it through the federal government and keep their federal loan benefits. 

Make More Than the Minimum Monthly Payment

“For those who are not eligible for refinancing or already have only a few payment places and have a little extra money to put towards payments, paying more than the minimum every month, even if it’s $5, $10 or $50 per month, will help you to pay off your debt faster,” said Ebeling.

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Putting extra payments towards federal loans is critical during the current repayment pause. Ebeling said that doing so means the money goes right to the principal balance.

“When federal payments resume, federal loans will be re-amortized with the same loan length remaining,” said Ebeling.

Do I Refinance or Consolidate My Student Debt?

If you’re not sure whether your financial situation calls for refinancing or consolidating student loan debt, Ebeling said to consider the following factors for your loans.

You can start planning for the best way to tackle repayments, whether that means consolidating or refinancing, once you understand how many loans you have, your interest rates, and the outstanding balance. 

“Consolidation will simply weigh the average of your loans,” said Ebeling. He uses the example that if a borrower has $10k on a loan at 7% and $10k on a loan at 5%, they would have a new loan of $20k at 6% through consolidation.

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Refinancing does factor into consideration your income and credit score. Some individuals, like a new college graduate, may not qualify for refinancing rates. Ebeling recommends consolidation for borrowers in the meantime. This can help simplify payments while borrowers work to develop a more robust credit history and may apply to refinance at a later date.

If you are currently reviewing options for refinancing, pay attention to the current timing. Now might be the best time to refinance student loans.

“With the expected interest rate hikes from the Federal Reserve over the coming months potential savings are likely higher now than they will be versus waiting,” said Ebeling.

Ask Yourself: What Are Your Short- and Long-Term Goals?

Still trying to decide if you should refinance or consolidate your student loans? Ebeling recommends considering your short- and long-term goals. 

“Both refinancing and consolidation may allow a borrower to extend their term and lower payment,” said Ebeling. “However, with the extended term the loan may be more expensive in the long run. Do you want the lowest payment, quickest path to payoff or lowest overall cost? Understanding your goals is going to be key to making the right decision.”

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