Best Illinois Student Loan Refinance and Private Student Loan Options

If you’re an Illinois resident who’s interested in reducing your student loan debt, you’re in good company. Seventeen percent of people living in Illinois — more than 2 million people — have student loan debt.

Getting out of student debt faster is a common goal for many borrowers, and a common strategy to reduce this debt is pursuing Illinois student loan refinance options.

Not sure how to refinance Illinois student loans? Here’s everything you need to know.

Illinois student loan refinance options

When refinancing your student loans, remember that refinancing with a private lender means that you’ll lose eligibility for any federal student loan repayment programs. This includes programs, like income-driven repayment (IDR) or federal student loan forgiveness.

That said, many people still see value in refinancing after crunching the numbers on their debt. A lower refinance interest rate can help you pay off your loans faster, letting you redirect the savings on interest toward making extra loan payments.

Here are some places where you can find an Illinois student loan refinance.

1. Illinois credit unions

Credit unions are member-owned financial institutions. The institutions operate under the main mandate of bringing valuable financial services to their members, often at reasonable costs. As such, many people opt to refinance student loans with credit unions.

If you live in Illinois, here are some local credit unions where you can become a member and refinance your Illinois student loans:

• University of Illinois Community Credit Union. You can refinance student loans between $5,000 and $45,000 with a maximum term of 15 years.
• Members Alliance Credit Union. Serving the Rockford area, Members Alliance doesn’t specifically advertise student loan refinancing. But its unsecured personal loans can be used to refinance student loans and have rates between 5% and 9.5%*.
• First Northern Credit Union. It offers unsecured personal loans with APRs starting at 9.99%*.

2. Traditional banks

In addition to national banks, Illinois has several state-wide banks that offer personal loans. You’ll need to make sure the lender you choose allows refinancing student loans since each lender has different guidelines.

Here are a few local Illinois banks to consider:

• Illinois Bank and Trust. Although it doesn’t provide information about its APRs online, you can complete an application online or in-person at one of its 10 local branches in Illinois.
• INB. Apply online for a personal loan to refinance your student debt and find out what interest rate you might qualify for.
• Southern Illinois Bank. The bank has five locations in Southern Illinois and offers a loan application online.

You might be attracted to refinancing at an Illinois-specific bank, but you might not always get the best rate compared to other lenders, like online banks.

And although some lenders let you use a personal loan for Illinois student loan consolidation, this route likely won’t be as lucrative compared to a dedicated Illinois student loan refinance option.

3. Online lenders

Student loan refinancing in Illinois has become a competitive market over the last few years. Many online banks are vying for customers, which leads to better interest rates if you shop around.

Here are some online lenders to consider when refinancing your Illinois student loan:

• SoFi. This online lender has competitive rates and flexible terms. Plus, members of the Illinois State Bar Association can get up to a $1,000 bonus when refinancing their student loans with SoFi through our link.
• Earnest. Earnest provides refinancing options with flexible repayment terms. You can get up to a $1,000 bonus by refinancing through our Earnest link.

Pros of refinancing Illinois student loans

Refinancing your student loans can have many benefits. Here are the advantages to using this tactic:

• Reduce your interest rate. If your credit improved since you originally got your student loans, you could qualify for a lower interest rate. Lower rates translate into a lower monthly payment, freeing up more room in your budget for extra student loan payments or other purchases.
• Change your term. Refinancing your Ilinois student loans lets you change the term of your loan. A longer term will result in paying more interest over time, but could lower your monthly payment today. This can make a big difference if you need room in your budget to afford other life milestones.
• Remove a cosigner. If you had someone cosign on a previous loan, but would now like them removed, an effective option is through an Illinois student loan refinance. When you refinance, the new lender repays your old loan in full, and an entirely new loan and terms are drafted which frees up your cosigner.

Cons of refinancing Illinois student loans

Refinancing your Illinois student loans isn’t always the best option. Here are some drawbacks you should consider:

• Ineligible for federal repayment programs. You won’t qualify for federal repayment programs like income-driven repayment after you refinance your loans with a private lender.
• Ineligible for federal student loan forgiveness. Not only don’t you qualify for any federal repayment plans after refinancing, but you also won’t qualify for programs like Public Service Loan Forgiveness (PSLF). Do the math to figure out which debt pay-off option gets you out of debt faster. If you’re not in a high-earning profession, it could be smarter to stick with your federal loans to pursue PSLF or other taxable loan forgiveness.
• No additional protections. It’s rare, but sometimes the federal government announces additional protections for student loan borrowers. One example is its student loan payment deferment during the COVID-19 crisis. These same protections don’t extend to private student loan borrowers. Once you refinance federal loans, you’ll lose access to these provisions.

Illinois student loan forgiveness options

When it comes to repaying your student loans, refinancing isn’t your only option. There are some ways to access forgiveness for all or part of your loans. Here are some student loan forgiveness options for Illinois borrowers:

• Illinois Teachers Loan Repayment Program. Provides a matching grant of up to $5,000 for qualifying Illinois teachers who have also qualified for the Federal Stafford Loan Cancellation for Teachers Program.
• John R. Justice Student Loan Repayment Program. Provide up to $4,000 per year toward federal student loan repayment for state and federal public defenders, up to $60,000 maximum.
• Nurse Educator Loan Repayment Program. Awards up to $5,000 annually, up to four years, in educational loan repayment for qualifying nurse educators who remain in Illinois to teach.
• Veterans Home Medical Providers Loan Repayment Program. Provides up to $5,000 a year for a maximum of four years for loan repayment for medical providers working in the homes of Illinois veterans.

Even though repaying your student loans in Illinois can seem daunting, there are many refinancing and forgiveness options that borrowers can pursue.

Remember to weigh the pros and cons before deciding on an Illinois student loan refinance offer. Then, review quoted rates from each lender to make sure you’re getting the best possible rate.

*Rates aren’t guaranteed and are subject to change without notice.

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