When you refinance, you trade in multiple student loans for one new private loan with new loan terms.
Refinancing private student loans is often an easy decision if you qualify for better loan terms, but refinancing too often can prolong your student loan payoff and cost you in interest — even if every refinance is a lower rate.
Federal student loans, on the other hand, can come with benefits like income-driven repayment and Public Service Loan Forgiveness — although eligibility and access to these programs are changing under the Trump administration's "One, Big Beautiful Bill Act." This means if you choose to refinance federal student loans, you'll lose access to these programs for good.
Here's a breakdown of how often you can responsibly refinance your student loans, as well as what to consider before you do so.
What to know about student loan refinancing
Student loan refinancing usually has no origination or prepayment fees. That means you can refinance as often as you'd like, as long as it makes financial sense. You could likely get better loan terms if you refinance during certain times, such as:
- When your finances have improved. For example, maybe you're now making more money and have a better debt-to-income ratio than when you originally got your loan, or maybe you've improved your credit score.
- When lenders are offering lower interest rates. If interest rates have dropped, it could be a good time to shop around and see how much you can save.
You must refinance federal loans through a private lender because the federal government doesn’t offer student loan refinancing.
Is it bad to refinance student loans multiple times?
It's not bad to refinance multiple times if it saves you money or makes your payment easier to manage. If you've refinanced before, the biggest downside to doing it again is the potential hit to your credit score and prolonging the length you're repaying. Lenders perform hard credit checks when they pull your report, and too many can lower your score.
Additionally, refinancing too often may be a red flag to lenders. For example, if you refinance your student loans three times in one year, lenders could view that as you're in over your head with the payments and question if the fourth loan will make a difference.
Regardless of if it's your first or fourth refinance, it's in your best interest to look at multiple lenders for the lowest rate possible.
It could even protect your credit score from multiple hard inquiries — shopping around within a short window, such as 45 days, can show intent and prequalifying with multiple lenders before you officially apply will show you what rate you qualify for without impacting your credit score.
Refinancing a federal loan could seem like an appealing option, but refinancing to a private loan will disqualify you from helpful federal benefits and programs. Instead, consider federal student loan consolidation.
Advantages of refinancing your student loans multiple times
Refinancing your loans multiple times can ensure that you're getting the best loan terms you can, especially when it comes to your interest rate. The lower the interest rate, the more you can save.
If you opt to refinance multiple times, be aware of the of the length of the loan. For example, if you're seven years into a 20-year term and refinance into another 20-year loan, you'll be starting again at day one and now paying interest for that new 20-year term. Refinancing a loan into a shorter term with a lower interest rate is the best way to avoid going backward in payments.
For example, let's say you graduate owing $40,000 at a 6.5% interest rate with a standard 10-year repayment plan. But, you refinance student loans immediately after college and get a rate of 4.5%. Using NerdWallet's student loan refinancing calculator, here's how much you'd pay with your refinanced loan compared to your original loan on the same standard 10-year repayment plan:
Original loan
- Interest rate: 6.5%.
- Monthly payment: $454.
- Total interest paid: $14,480.
Refinanced loan
- Interest rate: 4.5%.
- Monthly payment: $414.55.
- Total interest paid: $9,746.44.
With your original plan, you'll pay $454 every month and $14,480 in total interest by the time the loan is repaid.
Refinancing that debt to a 4.5% rate on the same 10-year plan would save about $40 a month and $4,734 in total interest.
And as interest rates drop, you may qualify for even better rates. The same can be said if you earn more money or continue building good credit.
» COMPARE: Best student loan refinancing companies.
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.
If you have bad credit or low income, the lender may ask you to add a co-signer. If you're facing financial difficulties, talk to your lender or servicer about lowering your payment or rate before deciding to refinance.
