The average student loan balance for recent college graduates who borrowed is more than $29,000, according to U.S. News data. If you have a high balance, you may consider refinancing your student loans to take advantage of a lower interest rate or monthly payment.
But student loan refinancing isn’t an option for everyone. And with the newly signed spending package soon limiting student loan repayment options, it’s important to know what else you can do to simplify your repayment plan, reduce your monthly payments and eliminate your debt faster.
What It Takes to Get Approved for Student Loan Refinancing
Refinancing involves using a private lender to replace your federal or private student loans with a new loan. Although the process can help you lower your monthly payment, interest rate or both, it’s not necessarily easy to get approved for a loan at a rate that will help you save.
You’ll need to qualify for student loan refinancing, usually based on your credit score, income and debt-to-income ratio. Lenders are typically looking for a minimum credit score of about 650, and you may need to show at least two years of employment or meet minimum income levels for approval.
“If you’re a recent grad, your FICO score is probably not the best reflection of your credit risk as a student loan borrower,” says Travis Hornsby, student loan consultant and CEO of Student Loan Planner, a financial coaching company. Unless you’ve had the chance to build credit as a college student, it can take time to establish a good enough credit history.
That said, Hornsby points out that some lenders do have more modern underwriting criteria that also include factors like your savings balance and spending habits.
Many student loan refinancing companies allow potential borrowers to get prequalified and view rate offers on their websites without a hard credit check. But if you can’t get approved or your offers don’t allow you to save on monthly payments or interest, you may need to consider some alternatives.
“Whether or not you can refinance your loans, it’s important to understand your debt and come up with a plan to tackle it head-on,” says Kat Tretina, a certified student loan counselor who has written about student loans for consumer publications. “By exploring your options, you can make your debt more manageable.”
[Read: Best Student Loan Refinance Lenders.]
Will Refinancing Affect My Eligibility for Student Loan Forgiveness?
If you have federal student loans and refinance them with a private lender, those loans will no longer be eligible for student loan forgiveness.
“If you’re in the military, are a teacher or health care professional, or work for a nonprofit or government agency, you could qualify for forgiveness or repayment assistance,” Tretina says.
But if you’re only expecting to receive forgiveness for a portion of your federal student loan debt, it may be possible to refinance some of your loans and leave enough with your federal loan servicer to take advantage of both opportunities.
Before you proceed, however, carefully consider all your options to settle on the right path for you.
I Can’t Refinance My Student Loans. Now What?
Here are some things to consider if you can’t refinance right now.
Improve Your Credit and Cash Flow
If you’re having a hard time getting approved because your credit score and income are too low, it may be worth it to work on building your credit and increasing your cash flow.
To improve your credit score, prioritize making all of your debt payments on time each month. If you have credit cards, keep your balances low relative to your credit limit to maintain a healthy credit utilization rate, which makes up 30% of your FICO score. Avoid applying for multiple credit accounts in a short period, and use a free credit monitoring service to keep track of your progress.
To increase your cash flow, work on paying down other debt and increasing your income through a better job or a side business.
Building your credit history and increasing your cash flow can take time. But if you’re going to be paying off your student loans for the next decade or more, taking a year or two to improve your financial situation to qualify for refinancing can still save you money.
Get a Cosigner
If you don’t qualify to refinance on your own, you may have a shot at getting approved if you have a cosigner with better credit and a higher income.
Just keep in mind that your cosigner would be responsible for making the payments if you can’t. And while some private lenders offer a cosigner release program after you make a certain number of payments and meet credit requirements, you still may not get approved.
Consolidate Your Loans
If you have multiple federal student loans, you can consolidate them into one loan with the federal Department of Education. Consolidating can simplify your loan repayment plan, allow you to extend your repayment term and potentially give you access to repayment and forgiveness programs that you didn’t have before.
However, a direct consolidation loan won’t save you money because your new interest rate will be the weighted average rate of your previous loans, rounded up to the nearest one-eighth of a percent. Also, extending your repayment term to get a lower monthly payment could result in higher interest costs over the life of the loan.
[Read: Best Private Student Loans.]
Seek an Income-Driven Repayment Plan
If you have federal loans and your primary concern is being able to afford your monthly payments, it may be worth it to consider an income-driven repayment plan.
Currently, there are several income-driven repayment plans, but that will soon change, due to the recently signed budget law. Under the new repayment assistance plan, your monthly payment will be based on your adjusted gross income and number of dependent children. Even very low-income borrowers will have to pay a minimum of $10 a month.
The changes are set to go into effect for new borrowers on July 1, 2026.
Keep in mind that most private lenders don’t offer income-driven repayment plans, so it may not be an option.
Apply for a Forgiveness Program
The federal government and many state governments offer student loan forgiveness to borrowers who meet certain requirements.
With Public Service Loan Forgiveness, for instance, you can get your remaining loan balances forgiven after making 120 qualifying payments and working for a government agency or eligible nonprofit organization. However, the Trump administration is proposing changes to the program that will place restrictions on who can qualify, which could limit the accessibility of the program starting next year.
You can also qualify for the Teacher Loan Forgiveness Program, which offers up to $17,500 in forgiveness to teachers who work in a low-income school or an education service agency for five years and who meet other requirements.
Check with your state for more information on state forgiveness programs.
Request Repayment Assistance
Although not technically loan forgiveness, repayment assistance programs can also help you pay down your student debt. Examples include:
— National Health Service Corps Loan Repayment
— Nurse Corps Loan Repayment Program
— John R. Justice grant program
— Army College Loan Repayment Program
— Navy Health Professions Loan Repayment Program
Even some private employers offer student loan repayment assistance to their employees as a benefit.
Check whether you qualify for repayment assistance based on your career choice or through your employee benefits. Some programs require a certain number of years of service, but it can be worth it to save money while paying down your debt.
[Read: Best Student Loans Without a Co-Signer.]
Consider Temporary Payment Relief
If your financial situation is dire, even an income-driven repayment plan might not be enough. “Talk to your lender if you can’t afford your payment,” says Tretina. “You may be eligible for a reduced payment for a short period of time while you get back on your feet.”
These options are often called deferment or forbearance and may be available whether you have federal or private loans. Their terms typically vary by lender, though.
If you qualify for one or the other, there’s usually a time limit, after which you’ll need to resume payments. Also, interest typically continues to accrue during the relief period, unless you’re on a deferment plan with subsidized federal loans. (Though, starting in July 2027, the new budget law will eliminate deferments for unemployment and economic hardships on new federal loans.)
Deferment and forbearance are typically worth considering if you’re experiencing financial hardship and need a short-term reprieve. However they aren’t a long-term solution.
Make Aggressive Payments
If you can afford it, consider paying more than your set monthly payment. Extra payments typically go toward the loan’s principal balance and can help you eliminate the debt more quickly.
As you determine how much extra to pay each month, though, try to consider your overall financial health. If you put every extra dollar toward your student loans each month and an emergency comes up, you can’t get that money back from the lender to pay for it.
Hornsby recommends building a healthy emergency fund of at least $10,000 before tackling your student loan payments more aggressively. Depending on your situation, however, you may want more or less than that.
More from U.S. News
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Can You Settle Student Loan Debt?
Fixed or Variable Student Loan: Which Is Better?
What Should You Do If You Can’t Refinance Your Student Loans? originally appeared on usnews.com
Update 07/25/25: This story was previously published at an earlier date and has been updated with new information.
