Some lenders offer a monetary incentive for new and existing customers called a student loan refinance bonus. There are different kinds of student loan refinance offers you may come across, and it’s smart to compare them when you’re refinancing.
Read on to learn about student loan refinance deals and how they work to help determine if one might be right for you.
Student Loan Refinance Bonuses Explained
A student loan refinance bonus is an incentive from a lender to help bring in new business. A lender might offer a cash bonus or give an interest rate discount to borrowers who are refinancing student loans.
A refinance bonus is similar to a sign-up bonus you might get when you apply for a new credit card or open a savings account. After you are approved for a refinanced student loan with a fixed or variable rate, the lender will issue the bonus to you.
How They Work
To get a student loan refinance bonus offer, you typically need to apply for refinancing using a specific promotion link. The link might be on the lender’s website, you might get it in your mail or email, or a third-party partner of the lender may send it to you. Some student loan refinance deals are available for a limited time, while other are offered on an ongoing basis.
Once you’re approved for refinancing, you’ll receive the bonus from the lender. The bonus may be issued to you via electronic transfer to your bank account or mailed as a check.
Types of Student Loan Refinance Bonuses
Student loan refinance bonuses can come in different forms. Below are a few common types you might see if you’re considering refinancing your student loans.
Cash Bonuses
Think of this one-time lump sum as a welcome bonus you get for taking out a student refinancing loan. A cash bonus is a way for lenders to earn your business if you’re a new customer, or to reward you for being a loyal customer if you already have an account with them.
Referral Bonuses
If you’re a borrower who has refinanced student loans and you recommend your lender to other people, you may be eligible for a referral bonus. Your lender gives you a referral link or code that you can pass along to family and friends who are interested in refinancing their student loans.
When one of your contacts refinances their student loans using your personal link or code, you get the bonus. Lenders might also provide a bonus or discount to the newly referred customer.
Interest Rate Discounts
Some student loan refinance deals come in the form of discounts instead of cash back. For example, many lenders offer an interest rate discount to borrowers who sign up for autopay.
In exchange for signing up for automatic payments, the lender gives you a small discount off your existing student loan refinance rate — typically a 0.25% reduction. This discounted rate generally applies throughout your loan term as long as you remain enrolled in autopay.
How to Qualify for a Student Loan Refinance Bonus
To get a student loan refinance bonus, you’ll need to follow the lender’s specific requirements. This varies between lenders and bonus programs, but you can typically expect to take these steps.
1. Register or apply using the bonus link, code, or website page.
2. Fill out a student loan refinance application.
3. Meet the lender’s eligibility requirements and get your loan application approved.
4. Provide bank account details to receive your bonus.
5. Complete tax forms, like a Form W-9, if necessary.
6. Once your loan amount is disbursed, receive your bonus offer.
Depending on the size of the cash bonus you receive, you might be responsible for income taxes on the money. The IRS treats amounts of $600 or greater as taxable income. In that case, your lender might issue you a Form 1099-MISC for your tax reporting purposes.
Benefits of a Student Loan Refinance Bonus
You may decide to refinance if you can get a fixed interest rate, lower rate, or a more favorable term. As part of the refinancing process, a student loan refinance bonus can be a useful perk. Here’s what it might do for you.
• Help you earn cash back. If you’re already considering a student loan refinance, a bonus offer may sweeten the deal. Cash bonuses come as a lump sum that you can use in any way you’d like.
• Allow you to pay down your loan balance faster. If your goal is to be debt-free as quickly as possible, the bonus you earn can be redirected toward paying off student loans early. Ideally, if you qualify, you might be able to pair this strategy with a lower student loan refinance rate for greater savings over time.
• Provide benefits for you and a friend. By taking advantage of a referral-based refinance student loans bonus, you can get a cash-back incentive — and so potentially can the friend you referred. It’s a win-win for both parties.
The Takeaway
Paying back student loans can be costly. A student loan refinance bonus can help put money back in your pocket and potentially unlock a lower interest rate on your loan, if you qualify.
But before deciding on a student loan refinance bonus, look at the big picture. As you’re considering refinancing offers, calculate how much the interest rate on each loan will cost you over time. A refinance loan with a lower interest rate over the long term might be more financially beneficial than a high upfront cash bonus. Shop around with different lenders to find the best option for you.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Are student loan refinance bonuses taxable?
If a refinance student loan bonus is $600 or more, the IRS considers the bonus taxable. You’ll receive a Form 1099-MISC from the lender that you can refer to when filing your annual tax return. You are responsible for paying any tax liability associated with the bonus.
Can I qualify for multiple refinance bonuses?
You might qualify for multiple refinance offers, depending on your lender. For example, you may receive a referral bonus for referring a friend who takes out a refinance loan, and you might also qualify for an interest rate discount if you enroll your loans in autopay.
How do refinance bonuses affect my credit score?
Receiving a student loan refinance bonus doesn’t directly affect your credit score. However, applying for student loan refinancing requires a hard credit check, which can temporarily impact your credit score.
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