Should I Refinance My Student Loans?

If you’re working on paying off your student loans, you might ask yourself: Should I refinance? Answering this question isn't always straightforward, since a lot depends on your unique financial situation. 

This guide will help you make an informed choice about whether refinancing your student loans is the right move for you. 

Compare student loan refinance rates

How student loan refinancing works 

Student loan refinancing involves combining all of your student loans into a single refinance loan. This new loan ideally has a lower interest rate and better repayment terms to help make paying off your student debt cheaper and easier.

The refinancing process 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.

Pros and cons of refinancing student loans 

Pros of refinancing student loans

Refinancing can offer several advantages if you qualify for a better loan:

• Potentially lower your interest rate: If your credit score has improved or student loan rates have dropped since you first took out the loan, refinancing could lower your interest rate and save you money over the life of your loan.
• Change your repayment term: When you refinance, you have the option to extend your repayment term to lower your monthly payment and free up cash flow, or shorten it to pay off your debt faster and reduce total interest costs.
• Remove a cosigner: If you needed a cosigner to qualify in the past, refinancing may allow you to release them from responsibility for the loan.
• Typically, no up-front costs: Most lenders don’t charge application or origination fees for student loan refinancing.
• Simplify loan repayment: If you have multiple student loans, refinancing allows you to combine them into one new loan, with a single monthly payment.

Cons of refinancing student loans

Before refinancing, consider the potential drawbacks:

• Requires good credit to qualify: Without a good credit score or a creditworthy cosigner, your refinancing options may be limited.  While some lenders offer refinancing for borrowers with bad credit, you'll likely have fewer choices and higher interest rates.
• Possibility of a higher rate: If your credit score has dropped or market rates have risen, refinancing could result in a higher interest rate than you currently have.
• Potentially higher total costs: If you choose to extend your repayment term, you'll lower your monthly payment but increase the total amount you pay in interest over the life of the loan. 
• Loss of federal benefits: Refinancing federal loans turns them into private loans. This means losing access to income-driven repayment plans, loan forgiveness, and federal relief programs like deferment and forbearance. 

When should I refinance my 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 these two types of debt.

Federal loans offer special benefits like income-driven repayment plans, the ability to change your payoff plan as needed, generous forbearance and deferment options, and even loan forgiveness in some instances. But if you refinance these loans, you turn them into a form of private debt and will permanently lose all those perks.

Private student loans, however, don't offer those protections. That means there's generally less risk in refinancing private loans, since you're not altering your loan type or losing out on special perks.

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. Around 85% of student loan refinance applications with a cosigner were approved in 2025, according to Credible marketplace data.

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 is it a bad idea to refinance?

There are also circumstances where it might be a bad idea to refinance your student loans. Let’s explore these scenarios:

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 generous deferment and forbearance options.

For example, if student debt is forgiven in the future, only federal loans would be included, and you could lose out on the opportunity. The government also paused federal student loan payments during the COVID-19 pandemic. Refinancing federal loans would mean you wouldn’t benefit from any potential future pauses from the government. 

Your finances are unstable

Refinancing lenders typically look at your credit score, income, and debt to determine whether or not to approve you for a refinance loan. If you have unstable finances, there’s a good chance you won’t 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 changes in income or employment that could make it harder to keep up with payments.

If your credit score has dropped since you took out your loans or isn’t high enough to qualify for competitive rates, refinancing could leave you with a worse deal. The same goes if refinancing would involve the loss of valuable borrower benefits, such as forbearance 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.”

See Also: Why Refinancing My Federal Student Loans Was the Right Choice for Me

Am I eligible to refinance?

Every refinancing lender has its own eligibility criteria. Most lenders require a good credit score, which usually means a FICO score of at least 670 for either you or your cosigner. 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.

Most lenders allow you to check your eligibility and prequalify for a rate online, often without affecting your credit. 

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.

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. 

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, the amount of outstanding debt you have, and the new repayment timeline you select. You can use a student loan refinance calculator to estimate your new monthly payment and total savings.