Strategies for Refinancing Your Student Loans

Published on Author purefyadmin

Creating a plan to pay off student debt can be overwhelming if you don’t know where to begin. To give you a starting point, we have outlined 5 student loan refinancing strategies our borrowers use based on their goals. Each strategy focuses on different benefits of refinancing and goals for your payoff plan. Remember, when you refinance multiple loans we automatically consolidate them into one simple monthly payment.

Goals: Getting a lower rate and keeping your payment the same

One of our most popular options focuses on the main goal of refinancing: getting a lower interest rate. This strategy lowers your interest rate but keeps your monthly payment similar to what it was before refinancing. This strategy is best for borrowers who don’t want a significant change to their monthly payment but still want to get out of debt faster and save on interest cost.


  • Saves you money without significantly affecting cash flow
  • Gets you out of debt faster by putting more money towards the loan principal

Goals: Maximizing your savings and getting out of debt faster

This strategy is best for borrowers who can afford a higher monthly payment and want to get out of debt as quickly as possible. If you have a standard 10 year term, refinancing to our 8 year term is a great option. Lowering your interest rate and shortening your term by just 2 years will keep your monthly payment manageable and put you on track to get out of debt faster.


  • Saves the most on interest costs by lowering your rate and shortening your term
  • Pay off your student loans faster

Goal: Lowering your monthly payment

This strategy is best for borrowers who need to lower their monthly payment to free up cash flow for another use, like saving for retirement. It’s important to remember that if you choose this strategy, you won’t save as much on interest costs. However, since we never have prepayment penalties, you can pay more towards your loan when you are able without worrying about fees. Switching from a 10 year to a 12 year term can lower your monthly payment enough to bring in extra cash, but not so drastically that you’ll be paying off your student loans into your 50s.


  • Lowers your interest rate to help save you money
  • Lowers your monthly payment on your student loans to free up cash flow

Goal: Getting the same rate and term as your spouse

If you and your spouse would like to refinance your loans together, we can determine the interest rate using the higher credit score of the two. This situation is beneficial since you could potentially qualify for a lower interest rate thanks to your spouse’s high credit (or vice versa). This approach is best for spouses who want to get all of their student loans on a lower interest rate and more favorable term.


  • Simplifies your loans and gets you and your spouse’s loans on the same rate and term
  • Consolidates loans to get everything on the same payment date
  • Maximizes interest savings by calculating rate from the higher of two credit scores

Goal: Transferring your loan

If you have a cosigner on your existing loans and qualify for a loan without them, simply apply on your own to “release” your cosigner. This option can save you money and make you solely responsible for the loan without all the complex releases many lenders have. For those with a cosigner on a PenFed loan, our policy is to release your cosigner from the loan if you qualify for the loan on your own and request this option. If you want to take on the responsibility of a parent PLUS loan taken out for your education, you can transfer loan to your name through refinancing.


  • Enables you to transfer a loan or “release” a cosigner
  • Saves money on interest costs

See what refinancing your student loans with PenFed can save you with our Find My Rate tool.

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