When to Refinance Student Loans

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If you refinance your student loans, you might get a lower interest rate or reduce your monthly payments, which could help you get out of debt faster.

In fact, borrowers who refinance through Credible could potentially save an average of $17,344¹ over the life of their loan. However, refinancing isn’t always the best idea for everyone.

Here’s how to decide when to refinance student loans:

• When to refinance student loans
• When not to refinance student loans
• How to refinance your student loans

When to refinance student loans

Here are several situations where refinancing student loans might be a good idea:

• You want to pay off your loan sooner: If you refinance, you can choose a shorter repayment term — while this might raise your payments, it also means you could pay off your loan faster. You might also qualify for a lower interest rate, which could make it easier to repay your loan more quickly.
• You want to combine multiple student loans: Keeping track of more than one student loan can be like herding cats sometimes. It can also be difficult to know which loan to pay off first. Refinancing could simplify your repayment by combining all of your student loans into a single loan that’s easier to manage.
• You want to get a smaller monthly payment: The average student loan payment is $393. If you’re having trouble making ends meet, you could choose to extend your repayment term by refinancing, which will likely reduce your monthly payment. However, keep in mind that having a longer term means you might end up paying more in interest over time.
• You’re unhappy with your servicer or lender: If you’ve had a bad experience with the company managing your loans, you don’t have to stick with them. Refinancing lets you take your business elsewhere.
• Your income and credit are good: Refinancing lenders typically consider both your income and credit to determine if you qualify. Having verifiable income and good credit makes it more likely that you’ll qualify for a lower interest rate or better terms.
• Market interest rates are low: Sometimes refinancing rates fall so much that you might get a lower rate even if your financial situation hasn’t changed. You can also refinance again if rates change again in the future.

If you decide to refinance, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Also keep in mind that while federal student loan refinance is an option, you’ll lose your federal benefits and protections if you refinance to a private student loan. These include access to income-driven repayment plans and student loan forgiveness programs.

Keep Reading: 4 Credit Unions for Student Loan Refinancing

When not to refinance student loans

While refinancing might sometimes be a good choice, here are a few situations where it’s better not to refinance:

• You have federal student loans: If you refinance your federal student loans into a private student loan, you’ll lose your federal protections and benefits. This is especially important to keep in mind if you don’t have a solid financial footing since you’ll no longer have access to income-driven repayment plans.
• Your finances aren’t secure: Unlike federal student loans, private student loans don’t come with built-in protections such as deferment and forbearance. If your income could change or go down in the future, it might be better to wait on refinancing until your finances are more stable.
• You’re trying to get federal loan forgiveness: Refinancing federal loans means you’ll no longer be eligible for federal loan forgiveness programs. For example, you must have federal student loans to potentially qualify for Public Service Loan Forgiveness.
• You have poor credit: Having bad credit could make it harder to qualify for refinancing, especially if you want to get a better interest rate. While there are options for bad credit student loan refinance, they won’t come with the lowest interest rates.
• You’re close to paying off your loan: If you only have a short time left before your loan is paid off, it might make more sense to just pay it off instead of refinancing. Going through the process to only save a few pennies likely isn’t worth it — and that’s if you can even find a lender for such a small loan size.
• Interest rates are higher than what you already have: If the potential rate you could get is higher than what you have on your loan right now, it’s probably better to wait. However, It doesn’t hurt to check your rates to make sure.

Before you decide whether you should refinance, it’s also a good idea to see how much refinancing might save you over time. You can use our calculator below to see your potential savings if you refinance.

Learn More: Private Student Loan Consolidation

How to refinance your student loans

Refinancing your student loans is a big decision, so be sure to take the time to consider whether it’s right for you.

For example, if you can qualify for a lower interest rate or better repayment terms, it could be a good idea to refinance. But if you have poor credit or unstable income, it’s probably better not to refinance your student loans.

If you’re wondering how to refinance student loans, follow these six simple steps:

• Research lenders: There are many lenders that offer student loan refinancing, and some might be better suited to your needs than others.
• Fill out a form: You can compare your refinancing options through Credible after filling out a single form.
• Compare rates and terms: As you compare lenders, be sure to consider not only interest rates but also repayment terms and any fees charged by the lender.
• Choose the best offer for you: After considering as many lenders as possible, you can pick the option that best suits your needs. For example, you might choose a loan with a shorter repayment term and higher monthly payment to pay off your loan faster. Or you might extend your repayment term to reduce your monthly payment, lessening the strain on your budget.
• Complete your application: Once you’ve decided on a lender, you’ll need to complete a full application and submit any required documentation, such as pay stubs or tax returns.
• Stay current on your loans: You’ll need to keep up with payments on your old loans until your new loan is processed. Once this happens, be sure to double-check that your old loans have been paid off.

Remember to consider as many lenders as possible to find the right loan for you. This is easy with Credible — you can compare your prequalified rates from our partner lenders in the table below after filling out just a single form.

Lender	Fixed rates from (APR)	Variable rates from (APR)
	4.54%+	N/A
	2.70%+	1.93%+
	2.97%+¹	1.99%+¹
	3.34%+2	3.24%+2
	2.79%+3	2.39%+3
	3.46%+4	2.51%+4
	3.05%+	3.05%+
	2.99%+	2.19%+
	3.19%+	N/A
	2.99%+5	2.25%+5
Compare personalized rates from multiple lenders without affecting your credit score. 100% free! Compare Now Trustpilot
All APRs reflect autopay and loyalty discounts where available | 1Citizens Bank Disclosures | 2College Ave Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 5SoFi Disclosures

¹$17,344 savings disclaimer: Actual savings may be higher or lower. Average $17,344 savings calculation based on self-reported data from users who provided data to Credible.com about their original loans (such as loan balance, repayment term, and rate), created an account between Nov. 1, 2017 and Dec. 29, 2018, and refinanced into a student loan with a shorter repayment term than their previous loan(s). This calculation excludes borrowers who refinanced to a loan of a similar or longer duration or who reported loan terms that deviate from normal user experiences, including: (i) any loan term with less than one (1) year or more than twenty-five (25) years remaining; (ii) monthly loan payments greater than $5,000 per month; and (iii) any existing loan amount that deviates more than five (5) percent from the loan amount disbursed upon refinancing. Our calculations do not take into account variable factors such as the borrower’s potential eligibility for loan forgiveness, variable interest rates, or pre-payments. Please note that your actual savings may vary depending on interest rate, balance, loan terms, credit score, and other factors.

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