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No, you can refinance your student loans as often as you like. Refinancing can help you readjust your personal finances to make room for other goals, such as buying a home, getting a car — or eliminating your debt. But it might not always be a solution, especially if you can’t qualify for a better deal.
There are several benefits of refinancing your student debt — even if you’ve already switched lenders:
You can save on interest by shortening your loan term or qualifying for a lower rate with a lender. You might even be able to do both if you have stronger credit, a higher income or lenders are offering lower rates. This can help you save on the total cost of your loan or allow you to lower your monthly costs.
Extending your term or qualifying for a lower rate can help you save on the month-to-month cost of your loan. This can be particularly helpful if you’re looking to lower your debt-to-income ratio (DTI), which can help you get a better deal on other types of credit, such as a mortgage or car loan.
Variable rates can give you a better deal than fixed rates if the Federal Reserve keeps interest rates low. But they can give you monthly repayments that are hard to predict and might cost you more if interest rates increase. Most refinancing providers offer both and let you choose which works best for your budget.
Planning on going back to school or thinking of making another big change? Refinancing with a new lender that offers more flexible deferment and forbearance options can help you avoid defaulting on your loans if you have a temporary dip in income.
If you had to bring on a cosigner to refinance, one way to take them off when you’re ready to go solo is to refinance with another lender — especially if your current lender doesn’t offer cosigner release.
If you refinanced and are less than pleased with the new company handling your loan repayments, refinancing again is the only way you can change up your servicer.
While there’s technically no limit to how often you refinance, it’s not always the right move. Here are a few drawbacks of refinancing too often:
Lowering your monthly repayment might benefit you in the short run. But refinancing to lengthen your term multiple times means you’ll make more interest payments and increase the cost of your loan. It’ll also keep you in debt longer.
Take a breather before you decide to refinance again. Each time you apply, the lender runs a hard credit check. These show up on your credit report and can lower your score. If you’re comparing lenders and really want to know which offers a better deal, keep your applications to a two-week timeframe. Credit bureaus recognize this as rate shopping and count all those credit checks as one.
Most student loan providers and refinancing companies don’t charge any fees. But in some cases, you might have to pay an application or origination fee when you apply. In even rarer cases, you might also have to pay a prepayment penalty if you don’t see your loan through to the end of the term.
Consider what benefits you stand to lose before you decide to go with another lender. These might include:
There’s a chance you won’t qualify for a lower rate if your financial situation has taken a turn for the worse. And even if it has improved, you might not get a better rate if lenders are charging higher rates across the board.
While it’s possible to refinance your student loans with other types of debt, it’s not always the best idea. That’s because student loan refinancing companies offer significantly more benefits than most personal loan providers. These include longer terms, lower rates and fewer fees.
Once you refinance with a personal loan provider, you won’t be able to refinance your debt with a student loan provider ever again.
Before you decide to pull the trigger and refinance your student debt again, take these four steps to ensure it’s the right move:
You can refinance your student loans as many times as you want. But it’s not always going to be the right choice. Make sure you consider the total cost of your new loan before signing on with another lender.
You can learn more about how it all works with our guide to student loan refinancing.
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