How to refinance student loans with a low income
Key takeaways
- Individuals with low incomes may encounter additional challenges when trying to refinance their student loans.
- Finding lenders that have reasonable minimum eligibility requirements can help them qualify.
- A cosigner can also help borrowers with a low income qualify for refinancing, especially if the cosigner has excellent credit and a high income on their own.
Refinancing student loans can make it possible to save money on interest, choose a more desirable payment structure and generally improve your financial health. However, your ability to qualify for refinancing is directly tied to how healthy your finances already are.
If you’re hoping to refinance on a low income, meeting the eligibility requirements for a refinance loan can be difficult. Thankfully, there are plenty of methods that borrowers can use to increase their chances of getting approved.
How to refinance student loans with a low income
Refinancing your student loans can shave a big chunk off your monthly payment and reduce the total interest paid over the life of the loan. And when you have a lower income, finding ways to minimize your monthly payments or overall loan costs can help stretch your money a bit further.
Although lender requirements vary, here are some of the best strategies to increase your approval chances.
Make sure you qualify
Many student loan companies have minimum income requirements for refinancing, meaning they won’t accept borrowers with incomes below a certain threshold. Some companies solely focus on high-income borrowers, like physicians and lawyers, while others provide student loan refinancing for a wider range of salaries.
While most lenders don’t publicly list their income standards, some state that you’ll need to have “sufficient income” or be able to demonstrate “consistent income” by providing pay stubs. In most cases, your income will need to be higher than $24,000 or $30,000. As an example, Ascent provides student loans to eligible borrowers with gross annual incomes of at least $30,000.
Get a cosigner
If you have the option to apply with a trusted cosigner when trying to refinance your student loans, take it. A cosigner can help you score the best rates and terms overall. However, you don’t want to seek out just anyone to cosign on your loans. A good cosigner is someone with a solid credit score and steady income who can boost the quality of your application when you apply.
Lenders are more likely to approve borrowers with a cosigner because it gives them a backup option in the event the primary borrower defaults. Even if you can qualify for student loan refinancing without a cosigner, you may be offered a lower refinance interest rate if you add a cosigner with stronger finances.
Just remember that asking someone to cosign on a loan — especially if you have a long repayment term — is a huge favor. The loan will appear on the cosigner’s credit reports and can affect their ability to qualify for other types of financing. In addition, any late payments will impact the cosigner’s credit score alongside your own. On the flip side, staying current with your payments when you refinance can improve your and your cosigner’s credit scores.
Also note that some lenders offer the option to remove your cosigner after a few years of on-time payments once you’ve had a chance to increase your income. This move, called a cosigner release, can come in handy if you have access to a cosigner who wants to lend their credit to your cause for as little time as possible.
Compare multiple lenders
Every lender has its own set of requirements for applicants to meet. These can include:
- Income requirements
- Credit requirements
- Debt-to-income (DTI) ratio requirements
- Loan balance requirements
Minimum requirements put in place by lenders vary widely. If one lender rejects you, don’t assume that will be true with every lender.
Start by applying with lenders known to accept low-income borrowers or those that consider many variables outside of income. For instance, some lenders consider such factors as the degree you obtained, your earning potential or even how much money you have in savings.
You can prequalify with many lenders to get an idea of whether you qualify and what rates you’ll be offered without going through a hard credit check. Apply with at least three lenders that offer prequalification to ensure you’re getting the most competitive rates and terms for your financial situation.
Improve your credit score
If you have a low income, you’ll have a better chance of qualifying for a loan with a good credit score. Most lenders require a credit score in the mid-600s or higher. You’ll find it difficult to qualify if your score is below 650, especially with a low income.
If you can afford to wait, it may be better to work on your credit before refinancing your student loans. You can take a few steps to do so.
- Look over your credit reports: Checking your credit score with your credit card company or one of the major credit bureaus is the first step to take. You can also obtain a copy of your credit reports from AnnualCreditReport.com to make sure that there aren’t any mistakes bringing down your score.
- Audit your finances: If your credit score is lower than you expected, do an audit of your finances. Your debt payment history is the most important factor in your score, so set calendar reminders or set up autopay if you have a streak of late payments — and try to make at least the minimum payment.
- Pay down existing debt: You should also try to pay off as much debt as possible before applying for a new loan since a high credit utilization ratio can lower your score. If you can get your credit utilization below 30 percent of your available credit limits, this can help boost your score in the short-term.
Reapply
If you’re denied a student loan refinance because you have a low income, you can always reapply later when your income has improved. If your credit score increases during that time, that may also help your case.
You may also be able to appeal your case if you don’t have one solid income stream but can prove that you earn money in other ways. Reach out to a lender by phone or email to find out why your loan was denied and the steps for their appeal process.
Lenders that will refinance student loans with a low income
Several different lenders have relatively low minimum income requirements for student loan refinancing, or they are presumed to offer them. This makes these lenders a better option for low-income borrowers provided they can meet other eligibility requirements to qualify.
ELFI
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ELFI is very transparent about its minimum eligibility requirements for its student loan refinancing product. Borrowers need to be a U.S. citizen or permanent resident without conditions and with proper evidence. They must also have earned a bachelor’s degree or higher from a Title IV U.S. domiciled nonprofit college or university and have at least $10,000 in loans to refinance.
Minimum income requirements for ELFI start at $35,000, and the lender requires a minimum credit score of 680. Borrowers also need to have at least 36 months of credit history to be approved.
Laurel Road
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Laurel Road offers refinancing for borrowers who pursued degrees at accredited Title IV colleges and universities that offer undergraduate and graduate degrees. They even offer refinancing of student loans acquired to earn associate degrees in specific professions within healthcare, such as dental hygiene or diagnostic medical sonography.
While Laurel Road doesn’t list minimum income or credit requirements for student loan refinancing on its website, anecdotal evidence suggests borrowers need a minimum credit score of 680. The company falls short of listing a minimum income for its student loan refinance options.
Nelnet
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Nelnet is another company that offers student loans and refinance loans to eligible borrowers. While the company offers limited information on eligibility requirements for its refinance loans, borrowers who apply for student loans for college need a FICO score in the mid to high 600s and be a U.S. citizen or someone with permanent residency status and a valid Social Security number.
Anecdotal evidence shows a minimum income of $36,000 can also apply for refinance loans. Nelnet’s student loan refinance product also comes with no origination fees and hardship programs that can buy you time if you’re struggling to repay.
Splash
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Splash is a student loan refinance platform that lets you compare rates and terms across multiple lenders all in one place. This lets you enter your income and credit requirements once, then see multiple lender offers that can help you refinance your loans to get better rates or terms.
Refinancing through Splash is available to college graduates who earned a four-year degree from a Title IV accredited institution, as well as those with eligible associate degrees. Lenders through the Splash network also require an unspecified minimum income, a debt-to-income ratio no higher than 30 percent and a credit score of at least 700.
SoFi
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SoFi offers student loan refinancing to U.S. citizens, permanent residents and nonpermanent resident aliens who have previously enrolled or graduated from degree-granting Title IV eligible schools. While the lender doesn’t list a minimum income to qualify, it says borrowers “must be employed, have sufficient income from other sources or have an offer of employment to start within the next 90 days.”
Refinance loans from SoFi are offered in all 50 states plus Washington, D.C. A minimum loan amount of $5,000 applies across the board, although requirements may be higher in certain states.
Other repayment options if you have low income
Checking for employer-related student loan benefits is a smart strategy to consider while you wait. Through December 31, 2025, employers can offer up to $5,250 per year in educational assistance to cover college tuition, fees and supplies or principal and interest payments toward employees’ eligible student loans. If you’re unsure if your employer offers this benefit, reach out to your company’s HR department to inquire.
If you have a low income and you’re trying to refinance federal student loans, you may want to look into income-driven repayment plans in the future instead of refinancing. These plans base monthly payments on your income and family size, thus they tend to be affordable for those with large families, low incomes or both.
Unfortunately, the current presidential administration has removed applications for income-driven repayment plans from the U.S. Department of Education website for now. This means you may be able to qualify for a repayment plan based on your income in the future, but not for the time being.
Bottom line
If you have a low income, there are multiple lenders that offer unique eligibility requirements and base approval on factors other than just income. And even if you shop around and get offered a high rate now because of your income, you can always choose to refinance again once you’ve established better credit or increased your annual earnings. However, make sure that the rate you’re offered is lower than the rates on your original loans, or you’ll just end up paying more in the long run.
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