Refinancing your student loans just once could help you save thousands of dollars in interest over the life of your loan. Even better, refinancing your student loan debt again could help you save even more. But how often can you refinance student loans? The answer might surprise you.
Here’s everything you need to know about how often you can refinance your student loans.
How refinancing works
When you refinance your student loans, you work with a private lender to take out a new loan and pay off some or all of your current federal or private student loan debt. The new loan typically has different terms than your previous loans, including a new loan term and interest rate. If you qualify for a lower rate on your refinancing loan, you could save a significant amount of money.
Example: Let’s say you have $35,000 in student loans at a 7% interest rate, and you have 10 years left to repay that debt. If you refinanced and qualified for a 10-year loan at 5.5% interest, you’d save $3,185 over the length of your repayment plan. That’s a significant difference, and that’s with a relatively modest reduction in interest rate.
Tip:
Use a student loan refinancing calculator to find out how much you can save through refinancing.
How often can you refinance?
While many people do a student loan refinance just once, there’s no limit to how often you can refinance your student loans. If you want to refinance twice or even more, you have the ability to do so. And in some cases, refinancing again can help you save even more money than you did when you originally refinanced your student loan debt.
Example: Let’s say you waited two years until your income increased before deciding to refinance the above loan a second time. For the new loan, let’s say you qualify for a five-year loan at a new interest rate of just 4.5%. With a shorter loan term and a lower rate, you would save $6,431. That means you’ll have saved nearly $10,000 by refinancing your loans twice.
