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If you’re wondering when to refinance your student loans, you should consider doing so if any (or all) of the following are true:
- Your finances are in good shape
- You want to save money
- You want a lower, fixed rate
- You want to combine multiple loans into one
Refinancing has the potential to save you money, but it’s not always best for everyone. If you’re considering refinancing your student loans, you could lower your monthly payments or save on overall dues with a lower interest rate. Here’s when you should consider refinancing your student loans.
1. Your finances are in good shape
After graduation is a great time to refinance, but you typically want to have a steady job, income, and good credit score. Lenders typically look for a minimum credit score of 670 if you want to refinance.
If you’re earning a decent salary at a job you’ve been at for awhile, or your credit score has improved over the last few months, refinancing might be a good idea. These factors tell lenders you’re responsible with money, and shouldn’t have a problem repaying it on time.
While most refinancing lenders will require a college degree, you still have options to refinance your student loans if you didn’t graduate.
| Lender | Min. credit score |
 | Does not disclose |
 | 690 |
 | Does not disclose |
 | Does not disclose |
 | 700 |
 | 680 |
 | 670 |
 | 670 |
 | 670 |
 | 680 |
 | Does not disclose |
| Considering student loan refinancing? |
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2. You want to save money
If you’re struggling to make student loan payments or looking to save money overall, refinancing can help in one of two ways:
- Lowering your monthly payment: When you refinance your student loans, you may also be able to lower your monthly payments. This is a good option if you need to make your payments more affordable, but keep in mind that you may end up paying more in interest since you’ll typically have longer loan terms.
- Lowering your interest rate: If you have a stellar credit score, you could refinance to lower your interest rate. A lower rate means you’ll pay less in interest over the life of your loan — which can save you money.
Use this student loan refinancing calculator to estimate how much you could save in different situations.
3. You want a fixed rate
You might have variable interest rates on your current loans, which fluctuate based on market conditions. This means you may have different payment amounts from month-to-month.
If you refinance to get a fixed rate, you’ll know the exact payment you need to pay each month which could be easier on your budget.
4. You want to combine your loans into one
Whether you have all federal student loans, private student loans, or a combination of both, it can be difficult to keep track of them all. There might be multiple amounts, interest rates, and due dates for each loan which can get confusing — and even cause you to miss a payment. Just one missed payment can lower your credit score, making it hard to qualify for loans or credit cards in the future.
Refinancing will combine all your loans into one manageable payment. You’ll only need to be responsible for one loan, one interest rate, and one due date. Managing a single loan is much easier than staying on top of multiple payments and due dates.
When you’re ready to start refinancing your student loans
If you’re deciding whether refinancing is right for you, ask yourself a few questions:
- Is my credit score good enough? While you may qualify for refinancing with a poor or even fair credit score, you may end up with a higher interest rate than what you have now. That could mean you end up paying more over the life of the loan — not less. You might also want to enlist the help of a cosigner if your lender allows. They might not only help you qualify for a refinancing loan, but even secure you a lower rate.
- Are my interest rates high or low? You can compare lenders to see if you prequalify for a loan, so compare interest rates with your current rates. If you’re getting offered a higher interest rate than what you have now, you may want to keep your loans where they are.
- Is it in my budget? Sometimes people want to refinance to pay their loans off sooner, which can cause their monthly payments to increase. If you have the income and budget to afford the change, paying off your loans sooner can save you money in interest. On the other hand, if you’re refinancing to lower your monthly payment, keep in mind that means more cash in your pocket every month, but you’ll be paying more in interest over time.
Learn: How Often Can You Refinance Your Student Loans?
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