What Loan Term Is Right for Me?

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Refinance rates with Laurel Road start at 1.89%.

Checking your rates won’t affect your score.

Check out Laurel Road

Are you thinking about refinancing your student loans? Not only could this savvy move hook you up with a lower interest rate, but it also gives you the opportunity to restructure your debt with new payment terms, if you qualify. After you pick a lender, you can choose a new length for your loan and adjust your monthly payment accordingly.

This chance to alter your payment plan can be a huge help, whether you’re looking to pay your loans off more quickly or, on the flip side, lower your monthly bills by repaying at a slower pace. So which repayment term should you choose after refinancing your student debt?

First, let’s consider the different repayment terms available on a refinanced student loan.

What student loan terms are available?

Your student loan term refers to how long the lender expects it will take you to repay your debt. Student loan terms range from relatively short to almost as long as a traditional mortgage.

Most refinancing lenders offer student loan terms of five, seven, 10, 15 or 20 years. That’s a lot of terms to choose from, and it can be tough to know which one is right for you among so many options. But making the right selection is important, since your student loan term has a big impact on how much you pay each month, and the total cost over the life of your loan.

What’s more, once you choose, you typically can’t change your repayment term unless you decide to refinance again. You can prepay your loan ahead of schedule without penalty, but you probably can’t pay less than your monthly payment or add extra years to your plan.

Also note that if you refinance federal student loans — essentially turning them into private student loans — you’ll lose access to federal repayment plans, such as income-driven repayment and extended repayment. Most private lenders don’t offer these options, though some will postpone your payments through forbearance if you run into financial hardship.

In most cases, the term you choose at the beginning is the one you’ll have for the rest of your loan, so make sure to think through your decision before finalizing the deal.

How a short loan term impacts your financial situation

Are you leaning toward a relatively shorter loan term of five or seven years? Selecting a short term could impact your debt in a few important ways.

First, you might snag the lowest rates. Refinancing providers typically pair the lowest rates with the shortest terms. That’s not a guarantee, of course, and you’ll still need to have a great credit score to secure your best rate available. But it’s worth asking your lender about, because a lower interest rate means a cheaper loan.

Not only will a low rate save you money on your loan, but paying it off quickly will, too. The faster you repay debt, the less time the loan has to accumulate interest.

Let’s say, for example, you owe $30,000 at a 5.0% rate. If you pay it off over 15 years, you’d pay $12,703 in interest. But if you pay it off over just five years, you’d only pay $3,968 in interest. (You can crunch the numbers for your own situation by using our Student Loan Refinancing Calculator.)

The faster you pay back your loan, the less you’ll pay in interest. But naturally, paying back a loan fast typically means higher monthly payments.

Going back to that last example, your monthly bill on a 15-year term would be $237, but on a five-year term it would be $566. That will be a problem if the higher payment isn’t affordable within your current budget.

If you make enough money to swing this bill, however, selecting a short term could be a wise move. You’ll be out of debt faster and pay less interest.

But if you can’t afford it, you won’t have as many options to restructure your debt as you would through the federal government. So even if a shorter term is tempting, make sure you can really make the monthly payments — now and for the foreseeable future — before committing to a five- or seven-year payoff.

What about long student loan terms?

Now let’s consider the pros and cons of going with a longer repayment term of 10, 15 or 20 years.

With a relatively long term, you won’t have to pay as much toward your student loans each month. Lowering your monthly payment could be a big help if you’re struggling to keep up with bills or are worried about going into default.

And as mentioned above, you can always make extra payments to speed up repayment without penalty if you start making more money or get a windfall of cash. Then again, you might not be as motivated to pay more than you need to each month, even if you have the extra income.

A long term could also come with a slightly higher interest rate — but even if it doesn’t, the longer timeframe alone would cost you more in interest over the years.

Even with the extra costs, though, a long term could be the right option if you’re feeling financially stressed. Choosing a 10-, 15-, or 20-year payoff could provide you with breathing room as you establish yourself, work to increase your income and manage your cash flow wisely.

What’s more, freeing up more of your monthly income could mean you’re able to use that money toward other goals, whether building up an emergency fund or investing. If you have low-interest student loans, you might not care about paying them off as quickly as possible and instead choose to prioritize other financial goals.

Refinancing lenders with flexible repayment terms

If you’ve decided you’re ready to refinance and want to look at changing your loan term while you’re at it, these lenders are a good place to start. They all provide various loan terms with both fixed and variable interest rates, they can refinance both federal and private loans and accept undergraduate and graduate student debt.

You can learn more about your refinancing options full guide. And, if you want a deeper look at refinancing lenders and the terms they offer, check out some of our individual reviews, including the likes of SoFi, Laurel Road, CommonBond, LendKey, Citizens Bank and College Ave.

Choose your student loan terms carefully

Choosing a student loan loan term requires you to understand how different repayment periods impact your financial situation.

Longer loan terms mean lower monthly payments, which could benefit you today if your budget is already tight. But you’ll pay more out of pocket over the life of the loan, since you’re stretching out how long you make payments and pay interest.

A shorter loan term means saving money in the long run, since you’ll pay less in interest and may even get to refinance to a lower-interest rate loan. But the tight time frame could put a heavy burden on your cash flow right now, so make sure you can handle the higher monthly payments.

There’s no one-size-fits-all solution; the right term depends on your unique circumstances. So take a close look at your finances, and remember to consider both short- and long-term goals as you determine which loan term is right for you.

Kali Hawlk contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2021!
LenderVariable APREligible Degrees 
1.89% – 5.99%1Undergrad
& Graduate

Visit Splash

1.99% – 5.64%2Undergrad
& Graduate

Visit Earnest

1.99% – 6.84%3Undergrad
& Graduate

Visit CommonBond

1.91% – 5.25%4Undergrad
& Graduate

Visit Lendkey

2.25% – 6.53%5Undergrad
& Graduate

Visit SoFi

2.17% – 4.47%6Undergrad
& Graduate

Visit PenFed

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.


2 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.


5 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: 1. Fixed rates from 2.99% APR to 6.99% APR (with AutoPay). Variable rates from 2.25% APR to 6.53% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.12% plus 2.38% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score.Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

6 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.