Choosing Your Student Loan Refinance Terms

Q: How do I choose a student loan refinance term?

To choose the best option for student loan repayment term, reflect on your student debt repayment goals and why you decided to refinance your loans. If your goal is repaying your student loans as quickly as possible and can afford a higher monthly payment, a shorter term might make sense for you. However, if your goal by refinancing is to give your monthly budget some flexibility, a longer loan term might be something to explore.

Q: How long are student loan refinance terms?

Student loan refinance terms vary between lenders. However, common student loan term lengths are 5, 7, 10, 12, 15, or 20 years.

Q: What are the typical student loan refinance terms?

Typically, student loan refinance terms range from 5 years to as long as 20 years — almost as long as a conventional 30-year mortgage. The terms offered for a student loan refinance can differ between private lenders, since they can decide how little — or how long — they expect borrowers to repay their student debt.

Choosing Your Student Loan Refinance Terms

Jennifer CaloniaUpdated August 10, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Refinancing is one of many approaches to repaying your student loan debt. In addition to potentially reducing your interest rate during a refinance, you can strategically select student loan refinance terms that align with your repayment goals.Different lenders offer varying term ranges to choose from and figuring out which is the best option for student loan repayment isn’t always easy.

What Is Student Loan Refinancing?

A student loan refinance lets you turn one or more student loans into a new refinanced private loan. Refinance lenders will check your credit score to determine whether you’re qualified for their loan product and the rate you’re eligible for. If you agree to the new loan rate and repayment terms, the lender will pay off your original loans in full. You’ll then repay your new lender, based on the terms of your refinancing agreement. Student loan refinancing is available for existing federal and private student loans. The caveat to refinancing federal student loans is that the amount of federal loan you refinance will no longer be eligible for forgiveness or other federal benefits. There’s no going back once it’s done.

What Student Loan Term Lengths Are Available?

Private lenders offer a range of student loan terms for repayment. In this context, student loan term length is the amount of time you’re given to repay your loan in full.Each lender offers their own terms, some of which are short as 5 years while others are as long as 20 years. Terms of 7-, 10-, 12-, and 15-years for refinancing student loans are also common among lenders. Although you can choose your preferred term during the refinancing process, you can’t change the student loan term length after signing your agreement. Carefully consider which term you’d like to move forward with. If you want to change your repayment term while you’re in repayment, you can only do so through another student loan refinance, and there are no limits to how many times you can refinance.

Benefits of Short Student Loan Repayment Terms

The benefit of short loan repayment terms, like a five- or seven-year repayment timeline, is they generally have the lowest interest rate offered by the lender. Private lenders offer competitive interest rates for short student loan term lengths because the lender gets repaid faster. You’ll also be rid of your student debt faster with a shorter term, and by the end of your repayment schedule, you’ll have paid less interest overall. The downside, however, is your monthly student loan payment will be higher which might put a strain on your day-to-day finances.

Benefits of Long Student Loan Repayment Terms

Longer terms for refinancing student loans, such as a 15- or 20-year term, extend your repayment timeline over more years. Generally, you’ll have a lower monthly payment which can enable you to reallocate your monthly spending toward other goals, like housing expenses or building an emergency fund.The disadvantage is that your interest rate will be higher compared to a shorter term. You’ll also pay more interest charges over the life of your loan, and it’ll take you longer to pay off your student debt.

Choosing the Right Student Loan Refinance Term for You

There isn’t one “right” approach for paying back student loans. Before deciding on your student loan terms, review your financial situation and goals. Consider the following factors:

Your repayment goals. It’s easy to forget why you’ve chosen to refinance your student loans in the first place, but keep it front of mind. Are you already struggling with your minimum monthly payments? Do you want to finally be done with student debt and accelerate your repayment plan? These questions can help inform which term will get you closer to your goal.
Your monthly budget. Take stock of your current bills and expenses and calculate how much more, or less, you can realistically put toward your refinance loan payments.
The lender’s available terms. Some lenders might only offer a couple of student loan terms to choose from, while others might offer the entire range of possible repayment terms. Before applying with a particular lender, make sure they offer flexible terms that match your monthly budget.
The refinance loan’s monthly payment. Once you’re selecting a refinance loan repayment term, compare what each term’s monthly payment might look like. Confirm that your preferred term has a monthly payment that aligns with your budget.

Be sure to select a refinance student loan term that doesn’t stretch your budget thin. You can always make additional payments each month if you have extra cash flow, but if you can’t afford your minimum payment, you’ll risk falling behind on your loans.Recommended: Budgeting Tips for Beginners

Student Loan Refinancing With Lantern

If you’ve determined which repayment term would be worth refinancing student loans, compare multiple private lenders to find the most competitive option. Be aware that the amount you refinance will no longer be eligible for federal loan forgiveness programs.Lantern’s student loan refinance marketplace connects you with multiple lenders that match your refinancing needs. Compare refinance student loans now.

Frequently Asked Questions

How do I choose a student loan refinance term?

How long are student loan refinance terms?

What are the typical student loan refinance terms?

Photo credit: iStock/Moyo Studio

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About the Author

Jennifer Calonia

Jennifer Calonia is a Los Angeles-based finance writer who has covered the gamut, including student loans, credit card rewards, consumer loans, and debt. Her work has been featured in outlets like Bankrate, NerdWallet, Business Insider, Yahoo Finance, and U.S. News.

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