Should I Refinance My Student Loans?

Whether you should refinance depends on whether your student loans are federal or private.

Refinancing private loans has less risk. When you refinance federal loans, you permanently give up federal protections, such as income-driven repayment and forgiveness options. But those federal programs have changed in 2026. 

This guide covers when refinancing may make sense, when it may not, and how to check your options before you apply.

Compare student loan refinance rates

When to and when not to refinance at a glance

How student loan refinancing works 

Student loan refinancing replaces one or more of your student loans with a single private loan. Ideally, the new loan has a lower interest rate and better repayment terms, which makes it cheaper and easier to pay off your student debt.

Refinancing generally involves researching different lenders, comparing their offers, ensuring you meet their eligibility requirements, and submitting an application. If you’re approved, the lender then pays off your old student loans and replaces them with a new loan.

How much money can refinancing save me?

The amount of money you can save by refinancing student loans varies depending on your new interest rate, your outstanding debt, and the new repayment timeline you select. You can use a student loan refinance calculator to estimate your new monthly payment and total savings.  

Borrowers who applied through Credible for student loan refinancing and added a cosigner in the last year qualified for rates that were, on average, 1.16 percentage points lower than those who applied without one. 

For example, if you have a $40,000 student loan with a 10-year term and a 7.00% fixed rate, your monthly payment would be about $464, and you'd pay roughly $15,732 in interest. If you refinanced to a 5.84% rate, which is 1.16 points lower, your new monthly payment would drop to about $441, and you’d pay roughly $12,905 in interest. That's $24 less per month and $2,827 less in total interest over the life of the loan. 

When to refinance student loans

Refinancing might be a good idea, depending on your unique circumstances. Here are some situations where it might be a smart choice: 

You have private student loans

While you can refinance both federal and private student loans, there are major differences between the two.

Federal loans offer benefits like income-driven repayment plans, forbearance and deferment options, and eligibility for forgiveness in some cases. But if you refinance these loans, you turn them into private debt and will permanently lose all those perks.

Private student loans generally don't offer the same protections, so refinancing them carries less risk. You aren't changing your loan type or giving up federal benefits, though terms such as forbearance and cosigner release vary by lender.

You have stable income and good credit

Private student loan lenders typically consider both your income and credit score when deciding if you’ll get approved for a refinance loan. If you don't meet the lender’s income and credit requirements, you probably won't be able to refinance — unless you have a qualified cosigner who can fulfill those requirements. Not all private lenders allow a cosigner, so be sure to do your research first.

You qualify for a lower interest rate

It generally doesn’t make sense to refinance your student loans if you can't lower your interest rate. If you take out a refinance loan at a higher interest rate, you’ll end up increasing your borrowing costs and making your debt even more expensive. 

You have a cosigner with strong credit

If you're struggling to qualify for a refinance loan on your own, adding a creditworthy cosigner to your application — such as a parent or spouse — can help you get a lower rate. In the last 12 months, more than 86% of cosigned refinance applications on Credible were approved by a lender. 

You want to make smaller monthly payments 

Refinancing can make it possible to reduce your monthly payments. When you refinance at a lower interest rate or extend your repayment term, the amount you pay each month naturally becomes smaller. But it’s important to note that by extending your repayment term, you’ll risk paying more interest over time, even if your monthly payments are smaller. 

You want to remove a cosigner 

If you have a cosigner on your existing private loans and your lender doesn't offer cosigner removal, refinancing could be a way to absolve your cosigner of responsibility for your debt. However, this means you’d need to qualify for a new refinance loan based on your own credit and income credentials. 

When not to refinance student loans 

There are also circumstances where it might be a bad idea to refinance your student loans, including:

You have federal student loans

Refinancing may not be the best choice if you have federal student loans because you would lose out on federal protections and benefits, such as loan forgiveness programs, income-driven repayment plans, and deferment and forbearance options. However, federal student loan rules changed in 2026, and those changes affect whether refinancing makes sense for you.

If all of your federal loans were issued before July 1, 2026, you can still qualify for income-driven repayment options such as Income-Based Repayment (IBR) or the new Repayment Assistance Plan (RAP). The Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans are also available to borrowers with older loans, but both will be phased out by July 1, 2028, so you’ll need to pick a new plan. 

If you take out any new federal loan or consolidate existing loans on or after July 1, 2026, your only repayment options are the RAP or the Tiered Standard Plan. 

For loans made on or after July 1, 2027, economic hardship and unemployment deferments end, and forbearance is limited to nine months in a 24-month period. Loans made before July 1, 2027 keep their current options.

Your finances are inconsistent

Lenders typically look at your credit score, income, and debt to determine whether or not to approve you for a refinance loan. If your finances are inconsistent, there’s a good chance you may not qualify. You might also risk defaulting on the new refinance loan, which could damage your credit score and cause other financial problems moving forward. 

Learn More: Can I Get a Student Loan With Bad Credit? 

You can’t get a lower interest rate

Refinancing may not be the right move if you already have a low rate or a payment that comfortably fits your budget. It’s also worth avoiding if you expect income or employment changes that could make it harder to keep up with payments.

If your credit score has dropped or isn’t high enough to qualify for competitive rates since you took out your loans, refinancing could leave you worse off. The same goes if refinancing would mean losing valuable borrower benefits, such as forgiveness options or good-grade discounts.

Extending your repayment term through refinancing can also keep you in debt longer, so it’s not ideal if your goal is to pay off your loans as quickly as possible.

“In these cases, borrowers are often better served by creating a targeted plan to tackle either the lowest-balance or highest-interest-rate loans,” advises Sara Parrish, president of CampusDoor.

“Make sure you’re ready,” she adds. “Some of the most advantageous refinancing products require employment history and sustained income. In those cases, it can be worth waiting a year or two after graduation before making a move.”

Am I eligible to refinance?

Every lender has its own eligibility criteria. Most require a good credit score, which usually means a FICO score of at least 670 for you or your cosigner. They also allow you to check your eligibility and prequalify for a rate online, often without affecting your credit.

Other common requirements include:

• You have a stable income.
• You have a low debt-to-income ratio (which measures income relative to debt).
• You earned a degree using the loans you're refinancing.
• You can meet your lender's minimum and maximum loan limits.

How to refinance your student loans 

To refinance your student loans, start by comparing offers from multiple lenders.

“It definitely helps to shop around as different lenders offer different rates, payment terms, perks, and can have significant differences in forbearance provisions,” says Jack Wang, a wealth adviser at Innovative Advisory Group. “Don't just focus on the interest rate.”

One of the easiest ways to compare offers is to prequalify with multiple lenders using a tool like Credible. You’ll receive estimated rates and terms from several lenders based on your credit profile, which can help you choose the best fit. Most let you prequalify without affecting your credit score.

Once you’ve compared your options, follow these steps to refinance:

1. Gather necessary documents: Have your current loan statements, recent pay stubs or other proof of income, a driver’s license or ID, and tax returns ready.
2. Complete the application: Each lender has its own application process, often available online, where you can submit your documents.
3. Pay off your old loans: If approved, your new lender will use the loan funds to pay off your existing balances. From that point on, you’ll make payments toward your new loan only.