Refinancing student loans: What high-income earners need to know

By Dylan Myers | Published on October 21, 2025

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The term ‘high-income earners’ encompasses a broad range. While the IRS (Internal Revenue Service) defines high-income earners as those earning more than $400,000 annually, the Social Security Administration data defines upper-middle-class earners as the top 15-20% of people who earn between $80,000 - $100,000 annually.

Compared to the average person, these people earn a high annual income and many may assume they don’t struggle with student loan payments. However, that is not always the case, considering that 42.8 million borrowers carry federal student debt.

It’s important to note that many high-income earners went to college to get a degree that opens doors to a high salary. Doctors and MBA (Master of Business Administration) grads who make a healthy income have to make large investments in their college education. The average MD (Medical Doctor) carries over $240,000 in student debt. Once people in high-income professions make their full salary, they may not qualify for income-driven repayment plans*.

This means that despite their great salaries, high-income earners must take specific measures to budget, protect their wealth, and use specialized tactics to pay off their student debt. In this article, I’m going to discuss why student loan refinancing may be the most viable option for high-income earners and other financial tactics they need to know to improve their financial lives.

Quick financial strategies for high-income earners

If you are fortunate enough to make a good living, it’s easy to not watch your spending. In fact, over one-third of Americans making $200,000 and more are living paycheck to paycheck like their lower-earning counterparts. Use the following strategies to create a financial plan:

1. Define your short-term and long-term financial goals. Is it paying off debt, saving for a home, or investing for retirement?
2. Track your spending to understand where your money is going. Use tools like budgeting apps or spreadsheets and identify areas where you can cut back or optimize your expenses.
3. Automate your savings and bills. If there is a way to automate your expenses, like having a portion of your income go directly to paying a bill and toward a savings account, do it. Try to create different types of savings accounts, like one for holiday gifts or one for expenses such as your general liability insurance and other monthly bills.
4. Prioritize debt repayment: Prioritize paying off debt with the highest interest rates and find ways to lower your rates, like refinancing your student debt. Consider strategies like the debt snowball or debt avalanche method to tackle debts systematically.
5. Max out your 401k and/or Roth IRA: If your work offers a 401(k) plan (U.S. Internal Revenue Code employer-sponsored), contribute the maximum amount. If you’re self-employed, contribute the maximum to a Roth IRA (Individual Retirement Account).
6. Diversify your income: Once you have at least 6 months of expenses saved and you’re on track to max out your secure investments like a 401K and Roth IRA, consider additional sources of income such as Index Funds, ETFs (Exchange Traded Funds), and bonds. You could do this yourself, use a robo-advisor, or go with a qualified financial advisor who can help you find the right balance of investments. Before you invest, understand that day trading or investing in a single stock generally carries the greatest amount of risk. Going with a more conservative approach tends to lead to better results over time.
7. Audit and adjust regularly: Periodically review your budget to track your progress and make adjustments as needed. Your financial priorities may change, so your budget should evolve accordingly.

How to tackle student loans if you’re high-income

There are many great tools to help federal student loan borrowers, such as income-driven repayment plans and Public Service Student Loan Forgiveness (PSLF). The problem is that PSLF is only available to people working in certain professions and for qualified organizations such as non-profits, government agencies, and aid organizations.

Income-driven repayment plans base payments on your income and family size, making them a great choice if you have a low salary. However, they become less attractive as your income goes up.

If neither of these options works for you, it may be time to consider refinancing your student loans.

What is student loan refinancing?

Student loan refinancing is the process of finding a new, usually private, lender that would pay off one’s existing student loan debts for a lower interest rate and more manageable payments. Subsequently, the borrower would pay the new lender for the new payment terms.

Refinancing is available for anyone qualified based on eligibility requirements set by the private lender. That includes high-income earners who are still paying for their student loans or just looking for a better deal on their loan repayments.

Who is eligible for student loan refinancing?

Student loan refinancing requires good credit standing and steady income to qualify.

Generally, here are the requirements to get your student loans refinanced:

1. A good credit score. Student loan refinancing, in a sense, is still a typical loan, and private lenders who would extend this to you would look at your credit history and credit score.
2. A stable income. Your lenders would ask for proof of your stable monthly income, such as payslips or bank statements, to prove that you can afford the refinancing.
3. A cosigner. If your income does not match their requirements, some lenders may need to ask for a cosigner for your loan as a backup plan.
4. A low debt-to-income ratio (DTI). Some lenders look at the debt-to-income ratio to identify how much of your expenses and debts are repaid by your current income. The lower your DTI is, the more free cash you have to pay for an additional loan.

Depending on the lender, some may require borrowers to have a degree before being approved for student loan refinancing, especially if they don’t meet the income or DTI requirements above.

Earnest is one lender that offers refinancing before your degree is complete. This option is available to qualified borrowers who will complete their degree by the end of the semester.

The credit score is very important for private lenders when extending student loan refinancing. While you may not necessarily be rejected for refinancing, the loan may have higher interest rates than you’re currently paying, which you’ll be repaying for an extended period when the loan is approved.

Refinancing student loans as part of financial planning for high-income earners

If you’re in a high-income profession and started your career with a lot of student debt, consider refinancing student loans as part of your financial plans, especially if you have more than one type of student loan. Through this, you can:

1. Consolidate all your student loans into a single monthly payment allows you to monitor your repayments better.
2. Potentially save money if you get lower interest rates.
3. Make lower monthly payments through an extended repayment period if you qualify. This can give you more cash flow for other income-generating investments or assets.

Pros and cons of refinancing student loans

If you’re a high-income earner considering refinancing your student loans, here are some pros and cons you may want to consider:

Pros

1. A potentially lower interest rate and/or payment
2. If a cosigner is involved in your initial student loan agreement and you want to free that cosigner from the loan, refinancing releases the co-signer from responsibility when you take out a new loan.
3. Change your loan term. You can extend it for a lower payment, or if you have excellent credit, you may qualify for a lower rate and a shorter term.

Cons

1. You will lose access to all federal benefits if you refinance federal student loans, including any future forgiveness programs.
2. You are not always assured of a lower interest rate than your current loan. Your new interest rates depend on your credit score and history, based on each lender's assessment.
3. The eligibility requirements for student loan refinancing may not be for everybody, especially those with a poor credit score or a low debt-to-income ratio.

Refinancing student loans isn’t exclusive to private student loans but to federal student loans as well. However, before refinancing your federal loans to a private student loan, remember that you will lose the benefits of a federal student loan, including possible loan forgiveness and income-driven repayment plans.

How to refinance student loans- Choose the best lender for you

Depending on your situation and current student loan agreement, some lenders may work for you, while others may not. You must get all the necessary details from several lenders you have shortlisted to refinance your student loans, including interest rates, payment period, possible hidden fees or charges, and the amount you’d possibly save by refinancing either to a lower rate or a shorter term.

Earnest, for example, does not charge any fees (including late fees), and shows you different rate, payment, and term combinations so you can choose the one that works for you. You can check your rate in 2 minutes and it won’t impact your credit score.

Private lenders could include banks, credit unions, or other private individual lenders. When deciding which lender you should go for, ask the following questions first:

1. Do I need or does the lender require a cosigner for the loan to boost approval rates?
2. Is the loan interest computation simple or compounded?
3. Are the payment options favorable for my current situation?
4. Are the rates comparable to other lenders?
5. Does the lender have a good reputation in the market?

Compare interest rates and fees

Once you’ve shortlisted a few lenders that best fit your needs, ask them to provide you with an interest rate estimate and review fees they may charge. Earnest, for example, offers a free rate check and does not charge any kind of fees.

You can submit or supply the basic requirements to each lender, and they will assess whether you ‘prequalify’ and give you their rates based on the information you have provided.

Process your loan application

Once you’ve decided which lender to refinance student loans, you must prepare the necessary documents to process the loan. While requirements may differ from lender to lender, Earnest’s basic requirements and eligibility is discussed here.

Complete loan payoff and make payments to new lender

Once approved, the new lender will ask you to sign the final paperwork to finalize the student loan refinancing, typically a contract agreement containing all the new loan details.

After all documents have been signed, you must wait for the new lender to pay off your current loan. Then, you can make your payments to the new lender moving forward. Remember to wait for the new lender's approval or confirmation message before stopping payments on your current student loans to ensure you don’t incur any additional charges.

Debt payoff is a smart strategy for all borrowers

I recommend that all of my clients focus on debt repayment before their other goals. It’s the one thing that could hold back your financial progress. However, tools like refinancing could be a way to take care of your loans and put aside savings for your next financial goals. With judicious planning, you can make the most of your income and plan for your future.

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About the Author

Dylan is a financial advisor. He helps individuals and businesses achieve financial stability and growth. He is passionate about helping families with children find the most effective ways to invest in their education through sound financial planning.

Disclaimer

The opinions expressed by the interview subjects are not necessarily those of Earnest. This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.