You can refinance private student loans that you’ve defaulted on — if you can find a refinancing lender willing to look past the default status.
Most private lenders want borrowers to have a strong credit history, including a long track record of making timely student loan payments and taking few deferments and forbearances.
I know of only one lender that’s willing to refinance delinquent, defaulted, or charged-off loans: Yrefy.
Yrefy uses your credit score to help determine the interest rate of the refinanced loan, but it looks at other factors, including your debt-to-income ratio and whether you have a cosigner when it reviews your application. Read more about refinancing student loans with bad credit.
Can I refinance federal student loans that are in default? The Education Department doesn’t allow borrowers to refinance defaulted loans, but it does let them consolidate loans that are delinquent or in default.
Bad credit or a previous consolidation doesn’t prevent you from being eligible for a Direct Consolidation Loan. You’re eligible if you agree to pay the new Direct Consolidation Loan under an income-driven repayment plan or make three consecutive on-time payments based on 15% of your discretionary income. Read more about consolidating student loans more than once.
The interest rate for the new loan is the weighted average of the loans included in your application.
Not sure what type of loan you have? Federal student loans include Direct Loans, Federal Family Education Loans (FFEL), Perkins Loans, and PLUS Loans. Read more about how to tell if my student loans are federal?
Learn More: Can You Consolidate Defaulted Student Loans?