How Often Can You Refinance Student Loans?

Student loan refinancing can save you money if you qualify for a lower interest rate than you currently have. It's something you can do again and again to continue your savings and payoff journey.

If you're thinking about refinancing again and wondering how often you can refinance your student loans, nothing is stopping you. However, there are times when it makes sense and times when it doesn't.

Current private student loan refinance rates

How often can you refinance student loans?

There's no limit to the number of times you can refinance your loans. You're free to refinance as many times as you want.

It can make sense to refinance student loans multiple times if you qualify for better rates. However, there may be situations when it's not your best move.

If you have federal student loans, it's typically best not to refinance, as this will cause you to lose borrower benefits like access to income-driven repayment plans and loan forgiveness.

Michelle Petrowski, a certified financial planner (CFP) and founder of Being in Abundance, a wealth management firm in North Phoenix, Arizona, advises that keeping your federal student loan might be wise if you expect a future drop in income, such as becoming a stay-at-home mom.

“If you currently have an income-driven repayment option or think you may need one in the future due to reduced income,” she says, “then keeping that federal student loan may make sense.”

When should you consider refinancing again?

You should consider refinancing your student loans again if you're earning more now or if your credit score has improved since the last time you refinanced. Your credit score and income are two major factors that refinancing lenders consider when reviewing your application. If your financial situation and credit have improved, you may qualify for lower rates.

“Refinancing allows you to reduce the total cost of the loan over its term. This is achieved either through lower monthly interest payments or the ability to pay off the loan principal faster,” says Said Israilov, CFP and co-founder of Israilov Financial.

“Either way, refinancing helps you reduce the financial burden of student loans,” he adds.

It can also be a good idea to refinance student loans again if there are major economic shifts and interest rates drop significantly. Lenders generally adjust rates in response to the Federal Reserve's actions. If they drop, it can be a great time to jump on board and start comparing rates again.

“The declining interest rate environment is a prime time for people who carry interest-bearing loans to shop for lower rates,” says Israilov.

Additionally, refinancing is a possible solution if you're looking to extend your loan term and reduce your monthly payments. Just be aware that this will increase the amount of interest you pay over the life of the loan.

Pros and cons of refinancing student loans multiple times

If you're thinking about refinancing student loans multiple times, consider the following pros and cons first:

When refinancing might not be the best option

Refinancing student loans multiple times can make sense if the cost savings are worth it. But there are situations where refinancing simply isn't a good fit:

• You don't qualify for a lower rate: While you can change your repayment term, loan servicer, and monthly payment, the primary reason to refinance is to get a lower rate. If you qualify for the same rate, it likely doesn't make sense. Ideally, your new rate should be a minimum of half a percentage point lower than your existing one.
• You switch to a significantly longer repayment term: When you refinance, you can change your repayment term. Choosing a longer one can help lower your monthly payments. But if you're extending your repayment term by many years, you'll also be paying far more in interest charges. The goal of student loan refinancing is to save money. Paying more interest counteracts that, so refinancing isn't a good fit in that scenario.
• You're applying for a mortgage: If you're house hunting and ready to apply for a mortgage, you may want to hold off on student loan refinancing. You don't want a temporary ding in your credit because of a hard inquiry. “While a single hard credit inquiry usually has minimal impact on your credit score — often just a few points — frequent applications within a short period can have a more noticeable effect,” says David Green, CEO of Earnest. “So, if you're not certain you want to refinance or are applying for other lines of credit like a mortgage, you may want to hold off on applying.”
• You're changing jobs: Whether you're changing companies, moving from full-time to freelance, or vice versa, it might not make sense to refinance until you have an established history with your new employer. Lenders like consistency, so it may not be the best move to refinance while navigating a career change.