How Often To Refinance Student Loans

Regardless of your reason for refinancing, you don’t want to spend money needlessly. The first thing to do before deciding how often to refinance student loans is to consider the conditions for your original loan. There are a lot of different factors that go into getting a student loan, so chances are good that you could have received a better deal if you had shopped around.

Refinancing your student loans into a lower interest rate is one of the smartest financial moves you can make. Whether your interest rate is 5 or 6% and it’s been that way for years, or it’s just starting at a much higher rate than what you were recently approved for, refinancing is something everyone considering should be aware of. We will base our discussion today on – How Often To Refinance Student Loans. But, other resources which you can find on our website include some frequently asked questions such as: student loan refinance calculator and can you refinance student loans

How Often To Refinance Student Loans

You can refinance your student loans as often as you’d like. It can make sense to refinance multiple times — especially when your finances improve or private lenders decrease their rates.

Refinancing typically doesn’t carry any origination fees or other costs, and student loans don’t come with prepayment fees. If you can find a lower interest rate, you can save yourself money each time.

Refinancing means you combine your student loans into a new private loan with a lower interest rate. A lower rate will save you money over time by decreasing the amount you pay in interest. If you refinance again at an even lower interest rate, you can save more.

For example, say you graduate with private student loan debt of $40,000 at an 11% interest rate. You’ll make $551 payments every month for 10 years and pay $26,120 in interest by the time the loan is repaid.

But even without a huge rate decrease, you could save money by refinancing student loans immediately after college. For instance, you’d pay $76 less a month and $9,143 in interest over 10 years by refinancing to an interest rate of 7.5%.

You may eventually qualify for a better rate as you begin earning more money and building your credit, or if interest rates drop. If you refinanced the loan a second time at 4% after two years had passed, you’d save an additional $68 a month and $6,507 in interest over an eight-year term.

It’s not bad to refinance student loans multiple times if you’re going to save money or get a more manageable payment.

Refinancing federal loans will cost you access to loan forgiveness programs and income-driven repayment options. But if you already gave up those benefits, refinancing private student loans again can be a no-brainer.

The primary downside to refinancing often would be that lenders do a “hard” credit check before approving each new loan, and too many inquiries can lower your credit scores. Still, it’s in your best interest to shop around for the lowest rate possible.

You can avoid a bigger ding on your credit than necessary by limiting your shopping to a short window — typically up to 45 days — or prequalifying with multiple lenders before officially applying. Prequalifying won’t impact your credit score, but it will let you know what rate you qualify for.

student loan refinance calculator

Whether you’ve been paying off your student loans for six months or six years, refinancing your student loans could seem like a good idea. You could save hundreds or thousands of dollars, but it’s not for everyone. A student loan refinancing calculator can help you determine how much you can save. Once you have an idea of the APR and terms available to you from lenders, you can input those new terms, plus your current loan terms, into the calculator — from there, you can see how your monthly payment, total interest costs and payoff period will change.

Current monthly payment
Balance left on loan
Current interest rate
Remaining loan term
New interest rate
New loan term
New Monthly Payment

$ 684.10

Monthly Savings
Difference in Interest

Refinancing your student loans might be a good idea if:

  • You’re eligible: If you have a solid credit score and a steady job, you may qualify for an interest rate that’s lower than what you’re paying now.
  • You’d save money: It’s a good idea to refinance your student loans if you would either save money each month or lower the total interest costs of your loan.

If you don’t qualify for refinancing — whether you have poor or little credit — or you won’t get an interest rate lower than what you’re paying now, you may want to look at alternatives. For federal student loan borrowers, refinancing also means that you lose out on federal protections and benefits. For instance, if you ever need to pause payments, many private lenders don’t offer deferment or forbearance like federal student loans do. If you refinance your federal loans, you’ll also lose the ability to sign up for an income-driven repayment plan.

When Should You Refinance Student Loans

It’s smart to refinance student loans as soon as you can get a better deal than you currently have.

Cecilia Clark

When to Refinance Student Loans


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Generally, the sooner you refinance student loans, the better.

When you refinance, a lender pays off your existing loans with a new one at a lower interest rate. That can save you money in the long run — and from the very first payment.

When to refinance student loans depends on whether you’ll find a rate that makes a difference in your life. A $30,000 private student loan with an 8% interest rate, for example, will give you a $364 monthly payment over 10 years. Refinancing to a 10-year loan term at 5% interest will save you $5,494 in total and $46 per month — enough to make a dent in an electricity, cable or phone bill.

When to refinance student loans

Not everyone can qualify to refinance student loans. You typically need a college degree, good credit and an income that lets you comfortably afford your expenses and debt payments. If you meet these requirements, consider refinancing in these circumstances:

  • The savings will make a difference. It’s not necessary to wait until you have perfect credit to refinance, as long as you can qualify for a better rate than you have now. See if the lender offers a student loan refinance bonus, to boost your savings even more.
  • You have private student loans. You pretty much have nothing to lose by refinancing private student loans because these loans aren’t eligible for federal loan programs, like income-driven repayment and Public Service Loan Forgiveness.
  • You have student loans with high variable rates. It can be difficult to predict payments with a variable rate loan, and even loans with low variable rates can get more expensive to repay. Before they rise, consider refinancing to lock in a fixed rate.
  • The rate environment is strong. Both fixed and variable private loan refinancing rates can change based on economic factors, like the Federal Reserve hiking or cutting rates. When rates are pushed down, you may want to take advantage of the situation by refinancing.
  • Your finances have improved. If refinancing doesn’t make sense right when you graduate, consider it once you’re on sturdier financial footing. And if you previously refinanced but just paid off some credit card debt or got a raise, for example, you may now get a better rate — you can refinance as often as you want.

Readers also ask

Should you refinance student loans?

You should refinance your student loans if you would save money, you can qualify and your finances are stable. To qualify for the lowest rates — and the biggest savings — you’ll need an excellent credit score, clean credit history and enough income to support your debts and expenses.

If you have federal loans and are struggling to make consistent payments, refinancing is not for you. Instead, consider federal student loan consolidation or an income-driven repayment plan.

Can I refinance my student loans more than once?

You can refinance student loans as often as you’d like. If you’ve already refinanced and your credit has recently improved, consider refinancing again to lock in a lower rate. There are no application or origination fees, so refinancing won’t cost you anything.

Does refinancing student loans save money?

Yes, if you qualify for a lower interest rate. With a lower rate, you’ll have a lower monthly payment, freeing up cash for other expenses. You could also choose a shorter repayment schedule, which will help you become debt-free faster and save money in interest long-term.

When you shouldn’t refinance student loans

You generally can’t or shouldn’t refinance if:

  • You have federal loans and could see a drop in income. If there’s a chance your income could decrease, don’t refinance federal student loans. You’ll miss out on federal student loan relief options, as well as government programs like income-driven repayment.
  • You’re pursuing student loan forgiveness. Refinancing federal loans makes them ineligible for federal loan programs including Public Service Loan Forgiveness and Teacher Loan Forgiveness.
  • You recently declared bankruptcy. It’s not impossible to refinance student loans if you’ve declared bankruptcy, but it’s more difficult. Many lenders require that a certain amount of time — anywhere from four to 10 years — must have passed since your bankruptcy.

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