Refinancing Your Student Loans Without a Degree

Young woman studying with laptop, highlighting Brazos student loan options for college financing.

BIG Ideas:

  • Refinancing could help you lower your interest rate and the amount you’ll have to pay over the life of your loans.
  • Not all private lenders allow you to refinance without a college degree, so shop around.
  • Lenders that allow you to refinance will require a solid credit score and steady income.

Our paths in life can take many different directions. Yours took you to college for the opportunity to develop skills, build independence, and discover your interests. But for your own personal reasons, college is no longer the path for you.

The good news is that the time you spent in college helped you learn more about yourself, your interests, and the world around you. The not-so-great news is that if you borrowed money to pay for college, you’ll still have to pay back your student loans.

There may, however, be a way to get some relief with your payments: by refinancing your student loans.

But what exactly is student loan refinancing? And how could it help you?

When you refinance, you are essentially consolidating your federal and private student loans into one private loan with a single payment. Refinancing your student loan can help you potentially lower your interest rate and reduce the amount you’ll have to pay. It also allows you to make one payment to one lender each month, making it easier to manage your debt.

What Do You Need to Refinance?

If you’re considering a student loan refinance, there’s something important you should know: Not all private lenders will let you refinance if you haven’t graduated. Some will, but they will require you to meet some important qualifications.

For example, you may have to have:

  • An established and solid credit score.
  • Steady income.
  • A track record of making at least 12 consecutive on-time payments on your existing loans.

If you don’t meet these requirements, you could get a co-signer, though there are implications of having a co-signer that you should be aware of.

Important Things to Know About Refinancing

If you do find a lender willing to refinance your loans, there are some important things to know before you proceed.

One is that if you choose to refinance federal loans with a private loan, you’ll lose certain federal loan benefits, such as income-driven repayment and loan forgiveness. So, if you expect to take advantage of these benefits in the future, refinancing won’t make sense for you.

Another is that, depending on interest rates (which are always subject to change), you may not be able to save money by refinancing student loans. It may make sense to wait until a later date if interest rates drop.

Steps You Can Take Before Refinancing

If you’re seriously considering refinancing your debt, here’s what you can do:

  1. Look at all your current student loans to determine the type of loans you have (federal or private), the interest rates, balances, and your loan terms (when you must pay your loans back).

  2. Shop around for lenders that will allow you to refinance to learn their requirements and their interest rates.

  3. Check your credit score to see if it meets their requirements. If not, consider getting a co-signer.

  4. Determine if you expect to take advantage of federal benefits.

  5. Calculate how much you can save each month and over the life of your loan.

  6. Before you move forward, be aware of the mistakes to avoid when refinancing.

Your decision to leave college may not be permanent. If you plan to go back to college later, it may be helpful to get a handle on payments and loan debt now. That way, you get a head start on managing debt now rather than waiting until later.

Of course, you can consider other alternatives, such as working for a company that offers tuition reimbursement and finishing your degree part-time.

Whatever you decide, remember that the best chance you have of financial success and independence is to manage your money wisely and reduce debt. You can accomplish that whether you finish your degree or not.

Brazos is Here to Help You Manage Student Loan Debt

For more than 40 years, Brazos has helped parents and students manage higher-interest student loan debt. As a Texas non-profit lender, we offer competitive rates that can help you save. Contact us to learn more.