The star ratings we give lenders are designed to make comparison simple. We consider a range of factors, including APR and cosigner requirements, to determine a lender’s final score. This helps guide our reviews so you can make an informed choice when refinancing your student loans.
Lenders with longer maximum loan terms offer the most flexibility for borrowers looking to lower their monthly repayments. Because 20 years is often the upper limit, a lender that offers it receives 5 stars. A lender that only offers a short five-year maximum term earns 1 star.
How we rate minimum loan amount
★★★★★ — Less than $5,000
★★★★★ — $5,000 to $7,499
★★★★★ — $7,500 to $9,999
★★★★★ — $10,000 to $14,999
★★★★★ — $15,000 or more
The lower the minimum loan amount, the less you need to owe in order to refinance with a particular lender. Lenders receive 5 stars for allowing borrowers to refinance with a low current balance. The higher the minimum loan amount, the lower our rating. If a lender requires you to have a minimum balance of $15,000, we rate it with 1 star.
How we rate maximum loan amount
★★★★★ — 100% of balance
★★★★★ — $300,000 or more
★★★★★ — $200,000 to $299,999
★★★★★ — $100,000 to $199,999
★★★★★ — $99,999 or less
Lenders that will refinance 100% of your loan balance earn 5 stars because they offer the most flexibility for borrowers. Likewise, a lender that has a low cap on its maximum loan amount will only earn 1 star.
How we rate minimum APR
★★★★★ — 1.99% or less
★★★★★ — 2% to 5.99%
★★★★★ — 6% to 9.99%
★★★★★ — 10% or more
Because most student loans are unsecured, you can expect an APR between 2% to 9.99%, which will earn a lender a 4- or 3-star rating. In fact, the majority of lenders we reviewed as of October 2020 offer student loan refinancing between 2% to 5.99%, earning them 4 stars.
How we rate maximum APR
★★★★★ — Less than 10%
★★★★★ — 10% to 12.99%
★★★★★ — 13% to 15.99%
★★★★★ — 16% to 17.99%
★★★★★ — 18% or more
Maximum APR is easier to judge. All but one of the lenders we reviewed offered rates under 10% on both secured and unsecured student loan refinancing — which means most earn 5 stars. However, maximum rates fluctuate frequently, so these rating in particular are bound to shift with changes in the economy.
How we rate fees
★★★★★ — No fees
★★★★★ — Late or NSF fees
★★★★★ — Origination fees
★★★★★ — Prepayment penalties
A lender that charges no fees — including late and nonsufficient funds (NSF) fees — earns a 5-star rating. If a lender charges late or NSF fees, but no origination or application fees, it earns 4 stars. Origination, processing and application fees are weighed the same on our scale and will earn a lender 2 stars — largely because most lenders don’t charge these fees. Prepayment penalties are more rare and would earn a lender 1 star.
How we rate prequalification
★★★★★ — Prequalifcation available
★★★★★ — No prequalification available
Prequalifcation allows you to preview your rates without a hard credit check. This is becoming a more common process, and lenders that offer it earn 5 stars. But lenders that don’t aren’t uncommon and aren’t heavily penalized, so they earn 3 stars.
How we rate degree requirement
★★★★★ — No degree required
★★★★★ — Degree required
A degree is typically required if you want to refinance, which earns most lenders 3 stars. But if a lender allows you to refinance with or without a degree, it earns 5 stars.
How we rate cosigner requirement
★★★★★ — Can apply with or without cosigner
★★★★★ — Must apply without a cosigner
Because refinancing is geared toward graduates at every stage of their careers, many allow borrowers to apply with or without a cosigner — earning them 5 stars. Because of this, those that require borrowers to apply on their own only earn 3 stars.
How we rate cosigner release
★★★★★ — Cosigner release available
★★★★★ — No cosigner release available
Cosigner release is typically available after a set number of on-time repayments. While not every lender offers this option, the majority of lenders we review do. If you’re unsure of your lender’s policy, check with its customer service before applying.
How we rate customer reviews
★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average
★★★★★ — Subpar
★★★★★ — Poor
Customer reviews are an optional metric. If a lender has over 100 reviews on its Trustpilot or its Better Business Bureau (BBB) page, we give it the score with the largest number of reviews. For example, a lender that receives 4.5 stars from 100 customers on Trustpilot but 4.2 stars from 400 customers on its BBB page will earn 4.2 stars from us.
How we rate perks
★★★★★ — Offers one of these perks
If a lender has any of these perks, we give it an additional 5 stars.
Deferment options, not including hardship or military deferment
Option to skip a payment or change due date
Offers entrepreneur programs, career guidance and financial education resources
Mobile app for quick payments
Parent PLUS refinancing available
Debt consolidation with spouse available
Unemployment protection or multiple rounds of hardship deferment available
Option to refinance while still in school
Autopay discount of 0.5% or more
What we don’t consider
While these star ratings can guide you to the right lender, there are some factors that may still influence the lender you choose:
Eligibility requirements. Eligibility requirements vary widely between lenders. Check to make sure you meet minimum income, credit sore and other criteria before you apply.
Total cost. The total cost of refinancing your student loans will depend on the term you choose, APR you’re offered and the balance you still owe. You should calculate the potential cost of refinancing to be sure you’re saving money — or at least significantly lowering your repayments.
Loss of benefits. If you have federal student loans, you may want to hold off on refinancing. Federal loans come with a variety of special benefits, including loan forgiveness, private lenders don’t offer. Before you refinance, understand the full scope of what you’re losing so you can make an informed decision.
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Kellye Guinan is a freelance editor and writer, specializing in consumer lending. Her writing and analysis has been featured on Bankrate, MSN and MediaFeed. She holds degrees in anthropology and German language and literature from Middle Tennessee State University.
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