Education abroad is getting more expensive by the day. The cost of college education in North America has doubled this century.
At the same time the rupee is now half of what it was worth, and this means education is now four times more expensive than before. Hefty EMIs make financial planning difficult for young graduates just starting out. In this scenario, refinancing education loans may offer relief.
Student loan refinancing means replacing your existing loan with a new loan that offers better terms and a lower burden. In most cases, it also means exchanging a rupee loan from a bank of NBFC in India to a USD loan from a lender abroad.
If you are eligible, you could save on interest and reduce monthly payments at one stroke. This article will help you understand student loan refinance eligibility criteria, how to check interest rates. We also offer advice about whether refinancing is the right choice for you.
Why consider student loan refinancing?
It can be challenging to pay back large student loans for study abroad at 10-15% interest rates prevalent in India. You could enjoy a lower interest rate and a manageable monthly payment when you refinance with an international lender.
Here are the main reasons why fresh graduates opt for refinancing education loans:
Lower interest rates – Indian education loans have a high interest rate. Student loan refinancing at a lower rate reduces your total interest burden.
Loan consolidation – If you have multiple student loans, refinancing allows you to merge them into one loan. This makes budgeting easier.
Release of cosigner – An education loan from an Indian bank requires your parent or guardian to sign as a co-applicant and guarantor. When you refinance an education loan, you release them from the burden.
Repay debt faster – A smaller interest burden allows you to repay the debt faster. You can focus more easily on starting a family and buying a house.
Eligibility criteria for student loan refinancing
You want to refinance an education loan, but are you at all eligible? Even if refinancing looks attractive, your application could be rejected if you don’t meet all the criteria. Here is a list of the core aspects lenders usually check:
A good credit score
It goes without saying that any lender prefers a loan applicant with a strong credit score. Your Indian CIBIL score is irrelevant in the US and most other countries. To get a loan, you must build a local credit history from scratch.
Most lenders based in the USA prefer a minimum FICO credit score of 650. However, to secure the best interest rates, a score of 700+ is recommended. Also, lenders you to have 2-3 years of credit history in the country. However, this criterion is often relaxed in case immigrants and lenders abroad accept a shorter history of 8 months to a year.
Residency status
This is likely the most significant hurdle for Indian nationals. You have completed an MS from a good American university and look forward to a well-paying job. It is nearly impossible to refinance on a student visa like an F-1 or even during the OPT/STEM OPT period. You would at least need a work visa such as H-1B in the USA. H-1B visa holders are eligible for refinancing, provided they can satisfy the lender that they would be present in the USA for the tenure of the loan.
The principle is the same in other countries. Lenders in these countries will require you to have a stable, long-term legal status. This can include a Permanent Residency or a valid work permit with enough time remaining.
Stable income
You need to find a job that pays you enough to sustain yourself and pay back your loan. You typically need to be past any probationary period at your job. Applying after working for 3-6 months is ideal.
You also need sufficient income. There is no fixed number but it has to satisfy the Debt to Income ratio required by the lender. A DTI ratio between 35-40% is considered best, though 50% would also qualify you, provided you have very little other liabilities.
Education and degree
The degree you earned must be from a recognized and accredited university. This ensures that you will be employed for the remainder of the loan term. While there is no stated rule, lenders look favourably upon STEM degrees as jobs in these fields offer higher income stability.
Minimum refinancing amount
Your loan needs to be at least $10,000 for most lenders to consider your application. Below this threshold,
it would be difficult to refinance an education loan with a reputable lender. Since most education loans from Indian banks are in the region of ₹30 – 50 lakhs, this is not very worrying for an Indian student abroad.
Besides, there are other criteria. Some lenders refuse to refinance federal loans, but since Indian students are not eligible for such loans, you should not worry.
This table summarizes each eligibility factor and helps you know where you stand.
| Factor | What Lenders Typically Require | Why This Matters |
| Credit Score | Many lenders look for a credit score of ~650 or above.
A few need 700+ for the best rates. |
A higher credit score helps secure a lower interest rate and better terms.
A lower score may lead to approval, but at a higher cost. |
| Income & Employment | A steady job (permanent or long-term contract) with proof via pay stubs and bank statements.
Some lenders have a minimum income threshold. |
This ensures you can repay the loan. A lack of stable income is seen as a significant risk for the lender. |
| Debt-to-Income Ratio (DTI) | Lenders prefer your total monthly debt payments (including the new loan) to be a manageable portion of your income.
An ideal DTI is often below a specific threshold. |
If your existing debt is high, adding another loan may overburden your finances.
A high DTI can lead to a higher interest rate or rejection. |
| Loan Type & Balance | Loans must be eligible for transfer.
The balance must also meet minimum and sometimes maximum limits. |
If your loan type is excluded, you cannot refinance it.
A balance that is too small may not make refinancing beneficial after accounting for fees. |
| Residency & Visa Status | Many lenders prefer permanent residency.
For non-residents, a valid, long-term visa is typically needed. |
Lenders must manage legal risk.
If your status does not meet their requirements, you will have far fewer lender options available. |
Steps to improve eligibility
Do not worry if you feel that you are not eligible for refinancing education loans. You can make improvements that make your financial profile more appealing to lenders. Here are a few actionable steps you can take to secure student loan refinancing.
Build a Strong Credit History
Most students from India don’t have a good credit history in the USA. To rectify the situation obtain a credit card. Do not use more than 30% of your credit limit, and each month pay back the outstanding. You should try not to have more than 90-day-old debts. In 6 – 8 months, your credit score should improve though it would take over a year to get into the 700+ zone.
It is also important that you don’t close older credit card accounts. It is not only the score that matters, but the duration of your credit history.
Strengthen and Stabilize Your Income
Lenders want to be confident that you can manage regular repayments. Explore opportunities to raise your salary or upgrade your skillset. Take up additional part-time work or consider freelancing in your spare time to boost your income.
Improve Your Debt-to-Income Ratio
Debt to Income ratio is all important for any kind of loan. It reflects how much of your monthly earnings go
toward paying debts. The best way to improve DTI ratio is to reduce outstanding balances on credit cards or personal loans. It helps to be loan-averse when you are trying to refinance. It might take a few months of scrimping, but once you have paid off your card debts, you will be in a vastly better position to negotiate.
Secure a Co-signer
If you can get a permanent resident abroad to co-sign your debt, it becomes a lot easier to refinance an education loan. If you have relatives abroad, you could approach them. Perhaps this is not the easiest step to gain student loan refinance eligibility, but it works the best.
Best student loan refinance lenders
If you are looking for lenders that offer good refinance options, here are some of the best providers. These lenders are known for competitive rates and flexible terms.
| Lender | Who It’s Best For | Key Feature | Do You Need a US Co-signer? | Important Things to Know |
| MPower Financing | Graduates without a US credit history or a co-signer. | Looks at your future career potential and not just your past credit score. | No | Offers fixed interest rates.
A good option if you are new to the US job market. |
| Prodigy Finance | International students and graduates working abroad. | Specializes in student loan refinancing for international students. | No | Always check their interest rates and fees, as they can sometimes be higher. |
| SoFi | Graduates with a strong US credit history and a stable job. | Offers some of the lowest interest rates and extra member benefits. | Often, Yes | You typically need a Green Card or a US citizen co-signer to qualify. |
| Citizens Bank | Those looking for flexible repayment plans and competitive rates. | Known for having good customer service and different term options. | Usually, Yes | You often need a co-signer who has permanent residency.
They have a minimum loan threshold. |
| Discover | Graduates who have a trusted US co-signer (like a friend or family member). | Offers a choice between fixed and variable interest rates. | Yes | Both you and your co-signer will need a good credit history to get approved. |
How Can GradRight Help?
Instead of checking your eligibility and terms with so many refinancing banks and NBFCs, wouldn’t it be better if there was a single window approach.
It is here that Gradright offers you the easiest solution.
Through its reverse loan bidding platform, Gradright helps you check student loan refinance rates from multiple lenders. You upload your details and documents once and sit back while the lenders offer the best student loan refinance terms.
If you need guidance, write to grad@gradright.com or call 09240209000. An expert will walk you through the options and help you check student loan refinance rates.
The bottom line
The process to refinance an education loan abroad can seem complex, but keep in mind that the benefits outweigh all else. At the start of your career, you can shave off several lakhs of loan cost and that alone makes it worth it. In addition, your parents back in India are released from their obligation as a cosigner.
Therefore, successfully refinancing an education loan marks a powerful transition that moves you towards a debt-free future in as little time as possible.
