NEW YORK (MainStreet) — Interest rates are low on consumer loans of almost every kind. Money should be available to refinance student debt. Yet borrowers find that the barriers are high when it comes to finding a lender who will give them a better deal.

While there's no good data on the size of the refi market, industry observers say that few major market participants are getting it done when it comes to bringing relief to student borrowers--even those with jobs who are current on their loan payments.

"Borrowers, even after graduating and attaining employment, find themselves unable to take advantage of their improved credit profile and today's historically low interest rates," said Rohit Chopra, student loan ombudsman at the Consumer Financial Protection Bureau, during a November 18 speech to the St. Louis Fed.

Chopra added that because a large slice of young households have student debt that's hard to refi, "the benefits accrued to these households from today's interest rate policies may be limited, compared to a household with a mortgage to refinance." Since younger households--headed by those aged 29 to 34-- tend to be poorer, he said, "reduced rates and lower payments might translate into higher consumption levels, given their marginal propensity to consume relative to other households." Would broke borrowers take the money they save on a refi and blow it on some ill-advised purchase? That possibility would seem to exist.

Industry observers say that private student lenders have little motivation when it comes to allowing existing customers to refinance. The student loan divisions of large banks are relatively small pieces of a larger enterprise, and there is a likelihood that will they overlook projects that have limited payback--like refinancing student loans.

TheStreet Recommends

But more to the point, a defaulted loan may cost the servicer less than putting a borrower in a loan modification program. That throws up an insurmountable barrier for anyone who needs a refinance to avoid a delinquency or a default.

Non-bank lenders are getting into this market but have been discriminating. Brooklyn, New York-based CommonBond will refinance grad students who are getting an MBA—-people likely to draw big salaries and present less risk. San Francisco-based Social Finance is also looking for low risk borrowers—-grad students who are moving from school to well-paying jobs.

"Our target market would be grad students that come out of grad school with jobs and income and have high student loan debt, primarily a Grad PLUS loan that they're paying 7.9% on," said Rob Lavet, general counsel for Social Finance, a position he also held with Sallie Mae. "We give them a better deal than the federal government in terms of rates. We were the first lender focused on loans that credit worthy borrowers have taken out."

And that's where the buck often stops. If you're credit score is golden and you have an income to match, lenders will show you some love. Desperate borrowers need not apply--or even the working borrower with up-to-date payments, but whose credit score doesn't meet coveted benchmarks.

A bank like Wells Fargo is still in student loans; it will offer a fixed rate on private loan consolidations, starting at about 7.5%. But the three other "Big Four" banks have pulled their money from the table. Bank of America, Citigroup and JPMorgan Chase have exited this business in the wake of the 2010 Health Care and Education Reconciliation Act, which ended federal guarantees on loans from private lenders. Chase remained the longest, exiting in September 2013. It continues to make student loans to existing customers.

--Written by John Sandman for MainStreet