One of the best student loan repayment options is taking out a refinance loan. Refinance lenders all have their own credit score (FICO), income and employment qualification requirements. If you meet these, you might be able to combine multiple student loans into one loan for a lower combined APR. This will in turn lower the amount you have to pay each month. Some refinance loan plans lower your APR and extend your loan term, reducing your monthly payment amount even further.

For example, combining multiple student loans totaling $50,000 (with a combined 8.5% APR) might reduce your APR by 4%. Doing this might shorten your loan term by two years and save approximately $13,000 over the life of the refinanced loan. While alternate repayment plans for student loans are also beneficial, they cannot always match the savings available when refinancing multiple debts through a third-party private refinance lender.

Qualifying for a student loan refinance program is like qualifying for multiple types of private loans available on the open market. You must meet specific FICO score criteria (usually 600 or higher). Your income must be verifiable as well. 

This generally means presenting your last two-year’s tax returns. A specified number of paystubs will also be required to verify your employment history and support your income claims. You will also likely be required to meet certain debt-to-income criteria, which will vary per lender but based on your FICO score.

The primary benefit obtained through a student loan refinance is the ability to save valuable money every month. These monthly savings convert to annual savings, which create a more stable financial future for you and your family (when applicable).

Additional benefits also apply. These benefits include:

• Improved FICO score.
• Removal of co-signers from original student loan debt.
• Gets you out of debt faster.
• Pre-qualification quotes are free.
• Comparison-shopping private refinance lenders might help you discover a better APR for your needs.

Improving your FICO score creates a plethora of additional benefits for your entire life. You become eligible for friendlier loans in the future. Your purchasing power improves, allowing you to get more of what you want out of life. Lower monthly payments are easier to make in-full and on-time as well, which also helps improve your FICO score.

If you have a co-signer on your original student loan, a refinance loan allows you to have them removed. This also improves your credit rating, while simultaneously giving you more control over the repayment of your student loan. Getting out of debt faster gives you more financial freedom faster as well. Most refinance lenders offer free quotes. Many even have free APR and payment calculators on their websites. 

This makes it easy to see what your monthly payments would be with each lender. The pre-qualification process also runs a soft credit check so your FICO score remains intact. Comparison-shopping between multiple lenders, taking advantage of free quotes and using pre-qualification tactics helps you locate the best refinance lender with the best rates and terms for you.