How Often Should You Refinance Student Loans?

You can refinance your student loans multiple times, especially as your finances improve or private lenders offer lower interest rates.

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There are no origination, prepayment or other fees associated with a student loan refinance. So if you can find a lower interest rate, you can save yourself money each time.

Refinancing private student loans is often a no-brainer if you qualify for better loan terms. These loans are already ineligible for federal relief programs.

Federal student loans, on the other hand, come with benefits like income-driven repayment and Public Service Loan Forgiveness. You'll lose access to these programs if you choose to refinance federal student loans.

» COMPARE: Refi offers from multiple lenders

Why you should refinance multiple times

When you refinance, you trade in multiple student loans for one, new private loan ideally with a lower interest rate. A lower rate can save you money over time by decreasing the amount you pay in interest. The lower the interest rate, the more you can save.

For example, let's say you graduate owing $40,000 at an 11% interest rate. On a standard 10-year repayment plan, you'll pay $551 every month and $26,120 in total interest by the time the loan is repaid.

But you can refinance student loans immediately after college. Refinancing the above debt to a 7.5% interest rate — still on a 10-year repayment plan — will save you $76 each month and $9,143 in total interest over the life of the loan.

And as interest rates drop, you earn more money or continue building credit, you may qualify for even better rates.

» MORE: Student loan refinancing calculator

Is it bad to refinance student loans multiple times?

It’s not bad to refinance student loans multiple times if it'll save you money or result in a more manageable payment.

The biggest downside to refinancing often is the “hard” credit check that happens as lenders pull your credit report. Too many hard inquiries can lower your credit score.

Still, it's in your best interest to look at multiple lenders for the lowest rate possible.

You can limit the impact on your credit score by shopping around within a short window — typically up to 45 days — or prequalifying with multiple lenders before officially applying. Prequalifying will show you what rate you qualify for without impacting your credit score.

» MORE: How do student loans affect your credit score?

Readers also ask

Can you refinance student loans?

You can refinance both federal and private student loans. You must refinance federal loans through a private lender. The federal government doesn’t offer student loan refinancing.

To qualify, you typically need good credit, positive credit history and enough income to afford debt payments and expenses.

Keep in mind that your federal loans become private loans when you refinance — no longer eligible for federal relief programs.

» MORE: Can you refinance student loans?

Should I refinance my student loans?

You should refinance your student loans if you qualify for lower interest rates. To qualify for the lowest rates — and the biggest savings — you’ll need an excellent credit score, clean credit history and a relatively low debt-to-income ratio.

If you have federal loans and are struggling to make consistent payments, refinancing would disqualify you from more helpful programs. Instead, consider federal student loan consolidation or an income-driven repayment plan.

» MORE: Should I refinance my student loans?

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.

» MORE: Does refinancing student loans save money?

How do you refinance student loans?

You can refinance with a bank, credit union or online lender. Find the lender that offers you the lowest rate, and apply.

» MORE: How to refinance student loans in 7 steps

If you have bad credit or low income, the lender may require you to apply with a qualifying co-signer. If you're facing financial difficulties, speak with your lender or servicer about ways to lower your payment or interest rate.