Student Loans in the U.S.: Should You Refinance in 2025?

Should You Refinance Your Student Loans in 2025? Here’s What You Need to Know

If you’re one of the 43+ million Americans with student loan debt, you may be considering refinancing in 2025. With changing interest rates, new federal policies, and inflation pressures, refinancing could help you save money, but it’s not the right option for everyone.

Here’s everything you need to know before making a decision.

💡 What Does It Mean to Refinance a Student Loan?

Refinancing means taking out a new loan from a private lender to pay off your existing student loans—ideally with a lower interest rate or better repayment terms.

✅ You can refinance both federal and private loans
❌ Once you refinance a federal loan, you lose federal protections (like income-driven repayment and forgiveness options).

📊 Pros of Refinancing in 2025

Lower Interest Rates (for Qualified Borrowers)
If you have a strong credit score and stable income, refinancing could qualify you for a lower rate than your current loan, which can save you thousands of dollars over time. To get started, you can check rates from top lenders like SoFi, Earnest, or Credible to find the best option for your situation.
Simplify Your Payments
Combining multiple loans into one monthly payment can simplify your finances and reduce stress. You’ll only need to deal with one lender. Learn more about simplifying student loan payments at NerdWallet.
Flexible Terms
Refinancing allows you to select a repayment term that works best for your budget. A shorter term means you pay less interest over time, while a longer term lowers your monthly payment. This flexibility can help you balance your short-term needs with long-term savings. Check out more on how to choose repayment terms on The Simple Dollar.
Potential to Release a Cosigner
If you used a parent or relative as a cosigner, refinancing can allow you to take the loan out in your name only, potentially releasing the cosigner from any obligation. Learn more about cosigner release on Student Loan Hero.

⚠️ Cons of Refinancing (Especially Federal Loans)

Lose Access to Federal Loan Forgiveness Programs
If you refinance a federal loan, you no longer qualify for Public Service Loan Forgiveness (PSLF) or any other federal loan forgiveness programs. Learn more about PSLF eligibility at Federal Student Aid.
Lose Income-Driven Repayment Plans
You’ll no longer be eligible for income-driven repayment plans that adjust your monthly payment based on your income. This can be a deal-breaker for some borrowers, especially those with fluctuating incomes. You can read more about income-driven repayment at Student Loan Planner.
No Federal Deferment or Forbearance
Refinancing removes your ability to request federal deferment or forbearance in case of financial hardship. Be aware of your potential needs for deferment and how refinancing can impact this. More details on deferment and forbearance options are available at NerdWallet.
Higher Rates for Some Borrowers
If your credit score or income is not strong, you might face higher rates than you’re currently paying, which could hurt your finances. Check your current rate and compare it with the best rates you can qualify for at Credible or LendEDU.

🔎 Should You Refinance?

Ask yourself these questions:

Do I have a high interest rate (6% or more)?
Do I have a good credit score (typically 680+) and stable income?
Am I not relying on federal protections like income-driven repayment or loan forgiveness?

If you answered yes to most of these questions, refinancing may be a smart option for you. For detailed steps on refinancing, check out The College Investor.

🏦 Best Student Loan Refinance Lenders in 2025

Here are some top-rated private lenders to consider when refinancing:

SoFi – Known for flexible terms and competitive rates.
Earnest – Offers a variety of repayment options and no fees.
Laurel Road – Specializes in medical professionals but available for other borrowers too.
Credible – A comparison marketplace to shop around for rates from various lenders.
College Ave – Offers customized refinancing plans and low fees.

Make sure to check rates using soft credit pulls so your score isn’t impacted while shopping around. For a detailed breakdown of each lender, visit Credible’s Student Loan Refinance Comparison.

✅ Final Thoughts

Refinancing student loans in 2025 can be a great way to cut interest costs and pay off your debt faster—but only if it aligns with your financial situation.

If you rely on federal protections like income-driven repayment or forgiveness, it might be better to wait.
If you’re financially stable and can handle the loss of federal benefits, refinancing could offer you significant savings.

Before you make the leap, run the numbers, compare lenders, and make the choice that sets you up for long-term success. For more resources on student loan refinancing, visit NerdWallet’s Guide.