How Many Times Can Refinance Your Student Loans?

Written by: Matt Kuncaitis
Updated: 4/08/21

Depending on your current financial situation, refinancing your student loans can potentially lower interest rates, allow you to pay your loans off quicker, save you money, and lower monthly payments. However, it’s important to understand that refinancing might not do all or any of these things. For example, while lowering interest rates generally decreases the total amount you’ll pay, if the payment terms are extended, or there are loan origination fees, you could end up paying more over the life of the loan.

The good news is that there are no rules about how many times you can refinance your loan. You can do it as many times as you want. However, it doesn’t make sense to do it without a clear reason, and it’s always in your best interest to run the numbers and verify that refinancing will meet your financial goals. 

This article serves as a simple guide to understanding how frequently you can and should refinance your loans and what to be aware of when you do. 

Can You Refinance Student Loans More Than Once?

The short answer is yes. You can refinance your student loans more than once. In fact, for most borrowers, it’s often a good idea to do so at least once, if not a second time or third time. 

The interest rates you get when you first borrow money for school can sometimes be high. If you have federal student loan debt, those come with fixed rates set at the time of disbursement. If you have private student loans, they may have fixed rates or variable interest rates, and depending on your credit history at the time, and whether you had a co-signer, those rates can be quite high. 

Once you’re out of school, you have time to build a stronger credit history and develop a decent debt-to-income ratio. This often means you can refinance your existing loans for better interest rates, especially when the market is favorable and rates are low across the board. Better rates can both lower your payments and allow you to pay off a loan sooner for less. It’s also possible to get a lower rate a few years after you leave school and then qualify for an even lower rate a few more years later, which is why some people refinance multiple times.

Student loan refinancing may also be an option for people struggling to make their current loan payments when loan forgiveness, deferment, or forbearance aren’t options. If your loan is federal, you can also choose from various income-based repayment plans to adjust your payment amounts if needed. But if that doesn’t solve your payment troubles, refinancing to a lower rate or extended payment plan might do the trick. 

How Many Times Can You Consolidate Student Loans?

Sometimes, people confuse student loan refinancing with student loan consolidation. They are different things, although both may occur simultaneously. Loan consolidation is the act of combining multiple loans into one loan containing all of your student loan debt, often with a new interest rate that is a weighted average of the rates of the existing loans. Loan refinancing involves taking out a new loan with new payment terms and using it to pay off the current loan or loans. 

Consolidating a loan can simplify repayment by making it so that you only have one loan to worry about instead of multiple smaller ones. If you have federal student loans, consolidation is free and can be done at any time through your student loan servicer. Consolidation typically happens once since after the loans are combined, they can’t be uncombined. 

Consolidation can also happen at the same time as private student loan refinancing. If you want to simultaneously combine your loans into one and change your interest rate and payment terms, you may wish to seek out a private student lender to refinance with.  

Note that “student loan consolidation” is often used to refer to the federal Direct Consolidation Loan, which is a refinancing of federal student loans only into one new federal loan. In some cases, the federal Direct Consolidation Loan can be the best option.

6 Things to Think About If You’re Considering Student Loan Refinancing Multiple Times

There are several pros and cons to refinancing student loans multiple times, which we’ll review in the following sections.

Monthly Payments

Each time you refinance, your student loan payments will change, as will your repayment period. Be aware that the due date of your payment might be different afterward, but you might also be able to work with your lender to change the due date if desired. 

The amount of your monthly payments will also likely change due to a combination of different interest rates and payment terms. Make sure you’re aware of what the new payments will be. If these new payments are lower, this might indicate that your repayment period is longer, and you might end up paying more even with a lower interest rate. If your monthly payments are higher, this is often because the loan is paid off in a shorter amount of time. 

Interest Rates

When you refinance, it should almost always be to a lower interest rate than your current one. Otherwise, you’ll just end up paying more in the end. What interest rates you qualify for will depend on your credit report. Good credit generally corresponds to better rates, although rates are also market dependent. Note also that there are fixed interest rates and variable rate loans. Fixed rates remain the same throughout the life of the loan, while variable rates change with the market. 

Some people get burned by choosing a variable rate that is initially lower than the fixed rate offered, only to have the rate increase significantly later on. Ensure you know whether your rate is variable or fixed and plan your finances accordingly.

Repayment Terms

Refinancing is an opportunity to change your repayment plan. For example, if you are two years into repaying a 10-year loan, you might refinance to a new 10-year loan or perhaps a five- or seven-year loan. 

If your student loans are federal and you’re looking into refinancing because you need to lower your monthly payments, always call your loan servicer first. Often, you can very easily change your federal student loan repayment plan to one of many income-based options that might work better for you than refinancing through a private lender. 

By not moving your federal student loan debt to a private lender, you also keep your options open for various student loan forgiveness programs, including Public Service Loan Forgiveness (PSLF) if you qualify. That said, some people can secure lower interest rates with private lenders when they refinance, making the move from federal to private worth it.

Credit Score Impact

The current status of your credit score will have a big impact on what rates and terms you might qualify for. If your credit hasn’t been good as of late, it probably isn’t a good time to refinance. Working toward improving your credit first improves your chances of qualifying for a good loan.

Borrower Benefits

One big consideration when it comes to loan refinancing is the benefits associated with being a borrower of a federal student loan versus a private student loan. Federal student loans are backed by the federal government, often have competitive rates, and have some of the most flexible repayment options around. It’s also often a lot easier to get deferment or forbearance for federal student loans.

These benefits should always be weighed against the benefits of a loan refinance. If you refinance through a private lender, you’ll lose out on some of that repayment flexibility and the safeguards in place on federal student loans. However, if a private lender offers better rates, refinancing can save a lot of money.

Application Fees

While you can refinance as often as you like, be aware of loans that might have application or origination fees. You should consider the cost of these fees as you decide whether to refinance. If the fees are substantial, they can undo any benefits you might see from an improved interest rate.

Find the Best Student Loan Refinance Options Today

Many borrowers refinance their student loans at some point, and some go through the process multiple times during repayment. The decision to refinance should always be made carefully. Make sure you know all the terms and conditions of the new loan. It’s also worth calculating the total you’ll pay with your current loan to compare it to the total you’ll pay with the new loan so that you have a clear picture of the financial effects of refinancing. 

Finding the best refinance and consolidation options for your needs doesn’t need to be difficult. At CollegeFinance.com, we can help potential and current borrowers understand loan terms, learn more about federal and private lenders, explore loan options, help with the application process, and more.