Making education more accessible for everyone is one of our missions. This includes demystifying the student loan refinancing process so lenders no longer have a monopoly on information.
How We Rate & Review Refinance Lenders
Our reviews prioritize the borrower (you) and to help you make informed decisions about your refinancing your student loan(s). While federal debt relief is becoming more widely available, not everyone qualifies. Private student loans, for example, do not benefit from federal programs that discharge student debt. Meanwhile, the average student loan debt increases at a rate of 13.5% per year.
Note: we updated our scoring system as of July 1, 2024. It is now a 80-point system, and the grading scale has been adjusted accordingly.
Scoring
A professional scorer for an international academic assessment servicer developed our evaluation system; this system is designed to be simple yet thorough.
Using a checklist method and point tabulation, we delineate terms and services of a given lender’s student loan refinance program. We then assign each point a positive or negative value that corresponds with its value to the potential borrower.
In other words, we essentially make a Pro-Con list. For example, any service unique to a single lender may be considered positive (Pro). The lack of a standard term or service may be considered negative (Con).
The general scoring rubric checks for standard terms and services. The auxiliary scoring rubric accounts for nonstandard and exceptional terms and services; it also supplies scoring guidelines for secondary and tertiary source material, such as customer reviews and legal claims. A lower-value impressionistic or “holistic” score complements these rubrics, allowing for up to 5 additional +/- points.
General Scoring Rubric
The general scoring rubric is for terms, conditions, and services that are more-or-less industry standards. For example, many lenders allow parents to transfer educational debt to their child or combine it with a spouse. A lender that does so may earn two (2) points on the general scoring rubric. A lender that does not allow this, however, may lose two (2) points. Scorers may allow partial points, so a lender that allows some debt transfer and co-borrowing may receive one point.
The highest score possible using the general rubric is +28 while the lowest possible score is -28; the median score is zero (0).
| +2 point value | -2 point value |
|---|---|
| Flexible rates or terms | Limited rates or terms |
| Zero standard fees | Hidden fees |
| Nonprofit status | High minimum loan |
| Deferment options | No deferment allowed |
| High-end rates below average | High rates |
| Low rate cap | High rate cap |
| Co-signer release | No co-signer release |
| Flexible eligibility requirements | Strict or undisclosed requirements |
| No bachelor’s degree required | Excessive restrictions |
| Multiple eligible loans | Limited availability |
| Combine or transfer ownership of debt | Unable to combine or transfer ownership of debt |
| Special discounts, such as autopay interest reduction | No discounts available |
| Includes marketplace application (compare rates) | Rate details undisclosed |
| In-house financing and/or servicing | Role in refinancing process unclear or limited |
Auxiliary Scoring Rubric
The auxiliary scoring rubric assigns points for nonstandard and exceptional terms and services. Unique services, such as refinancing loans for international students, may earn one (1) point. A large number of customer complaints relative to company size, however, may result in a negative one (1).
The highest possible score on the auxiliary rubric is +7 while the lowest possible score is -7; the median score is zero (0).
| +1 point value | -1 point value |
|---|---|
| No consumer complaints | Excessive consumer complaints |
| Third-party accolades | Lawsuits or criminal investigations |
| Company tenure | Lack of corporate transparency |
| Exceptional services or benefits, such as financial counseling | Troubling affiliation with other organization(s) |
Holistic Scoring
Finally, the lender receives a holistic or impressionistic score. In the tradition of essay scoring, the refinance lender earns additional positive or negative points depending on an overall “impression” of the lender.
This portion of the scoring process is the most likely to fall victim to reviewer bias. Influencing factors may be personal experience with the lender, a mistrust of an affiliated company or partner (such as a parent company with a very poor reputation), multiple dissatisfied customers with consistent claims, and other issues that may or may not impact an individual student refinance loan borrower.
Holistic scores may be worth between -5 and +5 points; the median score is zero (0).
Rating
After tabulation, assigning a letter grade to a reviewer is relatively simple. Instead of the classic 59%-to-100% scale, a score of zero (0) is equivalent to a “C” grade. A refinance lender with a C is considered an inoffensive, unexceptional lender.
Our reviews have a collective C+ average for multiple reasons. Because we prioritize the borrower, we usually review promising lenders first. Furthermore, poor-performing lenders tend not to last long enough in the market for us to review them.
| Letter Grade | Total Points |
|---|---|
| A | +15 or more |
| B | +6 to +14 |
| C | -5 to +5 |
| D | -22 to -6 |
| F | -23 and below |
Research
Reviewing refinance lenders requires research. Our research team uses each refinance lender’s website as the primary source for information regarding that lender’s refinance program information and details, including (but not limited to) advertised rates and terms, eligibility requirements, fees and other charges, deferment options, and restrictions.
The information a lender chooses to disclose on their official site, however, is limited. Additional resources include federal publications, the public record, and other third-party sources that may include their own bias and/or opinion.
Every source we utilize to develop our rankings and reviews is listed at the end of each review. We use the following resources regularly:
- The Consumer Financial Protection Bureau is a federal agency that regulates financial businesses in the interest of protecting the general public from predatory behaviors, such as fraud and harassment. Specifically, the CFPB’s Consumer Complaint Database provides us with reports directly from consumers (with certain identifying details redacted).
- The Federal Judiciary’s Public Access to Court Electronic Records (PACER) database of legal records filed with all U.S. federal courts includes official documents related to any lawsuits against refinance lenders.
- The Better Business Bureau is a tertiary resource. If a company has a profile on the BBB website, it includes a data snapshot and a section for customer complaints.
- Other tertiary resources include customer reviews on public forums and social media, such as:
- The College Investor
- White Coat Investor
- Bogleheads®
- myFICO
Potential For Reviewer Bias
Again, we prioritize borrowers and give precedence to refinance lenders based on their perceived benefits to borrowers. Because we assume such benefits (or a lack thereof) prior to additional research for review, we inherently begin our scoring process with a bias for or against the lender subject.
Student borrowers should always consider this potential for bias in our reviews. Always refer to the lender’s website for details and disclosures. View our sources for cross-referencing, especially in cases where information is subject to change (e.g. variable rates, interest rate indices, and legal developments).
Sources
- CFPB, Consumer Complaint Database
- Better Business Bureau, Search Businesses and Charities
- The College Investor: Investing & Personal Finance for Millennials
- White Coat Investor: Helping Those Who Wear the White Coat Get a “Fair Shake” on Wall Street
- Bogleheads.org – Investing advice inspired by John Bogle
- myFICO® Forums
- reddit, r/personalfinance