Refinancing your student loans more than once can be a great way to save on interest, lower your monthly repayments or change up your servicer. But it can also come with hidden costs, such as more interest payments on a longer-term loan. Weigh all the factors to make sure refinancing really can give you a better deal before you sign up.
Is there a limit to the number of times I can refinance my student loans?
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.
6 benefits of refinancing more than once
There are several benefits of refinancing your student debt — even if you’ve already switched lenders:
Lower your total loan cost
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.
Lower your monthly cost
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.
Change your interest rate type
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.
Get more flexibility
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.
Take a cosigner off your loan
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.
Change your servicer
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:
Longer terms increase the total cost
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.
Too many inquiries hurts your credit
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.
Refinancing can come with fees
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.
Not all lenders offer the same benefits
Consider what benefits you stand to lose before you decide to go with another lender. These might include:
Autopay or loyalty rate discounts
Deferment and forbearance options
Networking and career support
It’s possible to get a higher rate
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.
Avoid refinancing with a personal loan provider
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.
4 steps to take before refinancing
Before you decide to pull the trigger and refinance your student debt again, take these four steps to ensure it’s the right move:
Check your credit. Look at your credit report for mistakes and check your credit score to make sure both are accurate and high enough to help you get a better deal.
Assess your financial goals. Think about how refinancing might help you meet your financial goals — or hurt them.
Prequalify with multiple lenders. Find out if you can actually qualify for a better deal and search for the best option by filling out a prequalification form with more than one lender.
Read the terms and conditions. The best way to avoid hidden fees and make sure you aren’t losing any prized benefits is to actually read the disclosures before you sign your loan documents.
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.
Not necessarily. Refinancing again can help you meet your financial goals if you can qualify for a better deal or readjust your loan repayments. But it might not be a good idea if you can’t qualify for a more competitive rate or term.
Ideally, it should cost you nothing. Most student loan providers don’t charge application, origination or prepayment penalties — so you shouldn’t pay anything to switch lenders. However, that’s not always the case. And you might end up paying more in interest if you refinance for a longer loan term.
It might be possible if you’ve already refinanced or have private student loans. But you can’t negotiate a lower rate on a federal loan — those rates are set by Congress.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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