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With a limited income, how do you refinance student loans?

Student loan refinancing is a Catch-22 situation. On the one hand, it can help you save money on interest, choose a more convenient payment schedule, and enhance your overall financial situation. At the same time, your ability to refinance is directly proportional to the state of your finances.

That can be a frustrating reality for low-income borrowers. Fortunately, borrowers with modest income can enhance their chances of qualifying for a refinance in various ways.

Student loan income requirements

Many lenders have minimum income criteria for refinancing, which implies they won’t accept customers with salaries below a specific level. Some organizations cater only to high-income borrowers, such as surgeons and lawyers, while others offer student debt refinancing to borrowers with a broader range of earnings.

Most employers don’t make their income requirements public; some just mention that you must have “adequate income” or be able to establish “consistent income.” In most circumstances, you’ll need to earn more than $25,000; Citizens Bank wants at least $30,000 in annual income, while Education Loan Finance requires at least $40,000.

With a limited income, how do you refinance student loans?

Refinancing your student loans can cut your monthly payment in half and lower your total interest paid throughout the loan’s life. And when you’re on a tight budget, discovering strategies to cut your loan payments might help you save a lot of money.

Here are the greatest ways to improve your chances of getting student loan refinancing approved.

Obtain a co-signer.

If you have a modest income, applying with a co-signer is one of the best ways to increase your chances of approval. A co-signer is a person with a solid credit score and consistent income who agrees to assume responsibility for a loan if the principal borrower fails to repay it.

Because they have a backup option if the principal borrower defaults, lenders are more inclined to approve borrowers with a co-signer. Even if you qualify for student loan refinancing without a co-signer, adding a co-signer with better financial standing may result in a cheaper interest rate.

It’s a tremendous favor to ask someone to co-sign on a loan, especially if you have a long repayment term. The loan will be included on the co-credit signer’s record, which may damage their ability to qualify for future loans, and any late payments may influence the co-credit signer’s score. Most firms, however, would allow you to seek the removal of your co-signer after a few years of payments if you’ve had a chance to boost your income.

Obtain quotes from many lenders.

Every lender has its own set of standards for income, credit score, debt-to-income ratio, and loan balance. If one lender turns you down, don’t assume all lenders will turn you down.

Begin by contacting lenders who accept low-income applicants or who consider a variety of factors other than income. Without having to go through a hard credit check, you may prequalify with numerous lenders to know whether you qualify and what rates you’ll be offered.

Boost your credit rating

You’ll have a higher qualifying chance for a loan with a decent credit score if you have a low income. Most lenders require credit with 650 or better. If your credit score is less than 650, refinancing will be tough, especially if you have a modest income.

The first step is to check your credit score with your card issuer or one of the main credit agencies, and then order a copy of your credit reports from to ensure that there are no lowering errors in your score.

According to PaydayNow, Perform a financial audit if your credit score is weaker than you thought. If you have a history of late payments, set up calendar notifications or set up autopay to improve your credit score. 

Before filing for a refinance, you should aim to pay off as much debt as possible, as a high credit utilization ratio can damage your score.

Apply again at a later stage

If your application for a student loan restructure is declined due to a lack of income, you can resubmit it once your income has increased. It may also aid your case if your credit score improves during that period. If you don’t have a continuous source of income but can show that you generate money in other ways, you may appeal your case.


You might believe that refinancing student debts is impossible if you have a low salary. There are, however, a few lenders who will work with low-income consumers. Even if you’re currently being offered a high rate due to your income, you can always refinance once you’ve built up more credit or boosted your annual earnings.