How Often Should You Refinance Student Loans?
Consider refinancing student loans as often as your income or credit score improves or interest rates fall to get more favorable terms.
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When you refinance, you trade in multiple student loans for one, new private loan with new loan terms.
Refinancing private student loans is often a no-brainer if you qualify for better loan terms, because these loans are already ineligible for federal relief programs.
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 is changing under the Trump Administration's "one, big beautiful bill." But, if you choose to refinance federal student loans, you'll lose access to these programs for certain.
Here's a breakdown of how often you can reasonably refinance your student loans, as well as what to consider before you do so.
How often can you refinance your student loans?
Because there are typically no origination fees, prepayment fees or other fees associated with a student loan refinance, you can refinance your student loans as often as you'd like — provided that it makes financial sense to do so. 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, however. The federal government doesn’t offer student loan refinancing.
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Is it bad to refinance student loans multiple times?
No, it’s not bad to refinance student loans multiple times if it'll save you money or result in a more manageable payment. If you have federal loans and are struggling to make consistent payments, however, refinancing would disqualify you from more helpful programs. Instead, consider federal student loan consolidation.
If you've already refinanced your loans before, then the biggest downside to refinancing again is likely how your credit score is affected. As lenders pull your credit report, they perform hard credit checks. Too many hard checks 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.
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.
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.
But, refinancing the above debt to a 4.5% interest rate — still on a 10-year repayment plan — will save you about $40 each month and $4,734 in total interest over the life of the loan.
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.
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 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 before deciding to refinance.
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