How to Get a Student Loan Refinanced

Unlike scholarships and grants, student loans aren't free. You must repay any amount that you borrow, plus interest, after you graduate or stop attending classes. Lenders charge fees for their services in the form of interest. Interest continues to build on the unpaid balance of a student loan until you pay off the debt in full. If your credit and salary have improved since you originally applied for the loan, you may qualify for a lower interest rate than the one your account currently carries -- allowing you to pay down your debt more quickly. Although you cannot "refinance" your student loan in the same way that you would refinance a mortgage or auto loan, you can take out a personal bank loan to cover the outstanding balance on your student loan and then repay the personal loan over time.

Instructions

1

Pull your credit reports. Your lender will evaluate your credit history when you fill out a new loan application. Mistakes on your credit file that reflect badly on your debt management skills, such as a collection account that appears within your file in error, can prevent you from qualifying for the new loan you need.

2

Dispute any errors you find before you start loan shopping. The Fair Credit Reporting Act allows you to dispute credit information with both the credit bureaus and the creditors that provided the information to the bureaus. The FCRA requires creditors and credit bureaus alike to investigate your complaint and fix any errors within your file.

3

Buy your FICO scores. If your lender approves your application, it bases your interest rate on your credit scores. Knowing your FICO scores ahead of time helps you obtain estimated quotes more quickly. You can buy your FICO score directly from the company that owns the scoring formula, the Fair Isaac Corporation, at MyFICO.com.

4

Make a list of lenders you want quotes from. Call each lender and explain your interest in refinancing your student loan to a lower interest rate. Give the customer service representative your FICO scores and ask what interest rate you would qualify for. This speeds up the process since the company does not need to gather extensive personal information from you in order to access your credit reports and scores itself.

5

Provide the lender with collateral or apply for the new loan with a co-signer if you don't have an excellent credit history. Both collateral and a well-qualified co-signer reduce the lender's financial risk -- making it more likely that the lender will approve your application and grant you a lower interest rate than you would have received otherwise.

6

Read the loan paperwork thoroughly and make sure you understand all the terms and conditions of the new loan before you sign the paperwork. After you sign the paperwork, make your payments to the new lender each month rather than your previous lender.

7

Contact your previous student loan servicer and request written documentation that your account was paid in full. Put the documentation in a safe place. This paperwork protects you should your original loan servicer later claim you still owe a balance.