How Often Can You Refinance Student Loans?

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Federal student loan payments will resume on May 2, 2022. Consider all options before making a repayment.

You can refinance your student loan as often as you like. Multiple refinancing can make sense – especially if your finances improve or private lenders lower their interest rates.

There are usually no processing fees or other costs associated with refinancing, and there are no prepayment fees for student loans. Finding a lower interest rate can save you money every time.

Why you should refinance multiple times

Refinancing means combining your student loans into a new personal loan with a lower interest rate. A lower interest rate saves you money over time by reducing the amount you pay in interest. If you refinance at an even lower interest rate, you can save more.

Let’s say you graduate with a $40,000 personal student loan at an interest rate of 11%. You make payments of $551 every month for 10 years and pay $26,120 in interest when the loan is repaid.

You may eventually qualify for a better interest rate as you start making more money and build your credit, or when interest rates fall. If you refinance the loan a second time at 4% after two years, you save an additional $68 per month and $6,507 in interest over eight years.

Is it Bad to Refinance Student Loans Multiple Times?

It’s not bad to refinance student loans multiple times if you want to save money or get a more manageable payment.

Refinancing federal loans costs you access to loan forgiveness programs and income-based repayment options. But if you have already given up these benefits, Refinancing private student loans again can be a breeze.

The main disadvantage of refinancing would often be that the lenders do a “hard” credit check before approving any new credit, and too many requests can affect your credit score. Still, it’s in your best interest to shop around for the lowest possible price.

You can avoid draining more of your balance than necessary by limiting your purchases to a short window of time – usually up to 45 days – or Prequalification with several lenders before you officially apply. The pre-selection does not affect your credit score, but it does show you which interest rate you qualify for.

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