Can You Refinance Student Loans Before You Graduate?

Student loan refinancing means taking out new loans—often with different interest rates or repayment terms—to pay off your current loans. So can you refinance student loans while in school? It’s possible, but only certain lenders allow it. 

You might consider refinancing student loans to lower your interest rate, change your repayment term, or move your education debt to another lender. Before making a move, be sure to weigh the pros and cons to decide whether the timing is right. 

Keep reading because we’ll walk you through the advantages and disadvantages of refinancing student loans before you graduate and tell you which lenders allow it. 

Can you refinance your student loans while you’re in school? 

It’s more of an exception than the rule, but some private student loan lenders will allow you to refinance your loans while you’re still in school. To do this, you’d need to:

1. Find a lender that allows in-school refinancing
2. Meet the lender’s minimum qualification requirements
3. Apply for refinancing and be approved

Private student loan lenders consider a variety of factors when determining whether to approve you for a refinance loan. They can include your income, credit scores, course of study or degree program, and where you are in your education journey. 

If your credit score is below the minimum the lender requires or you lack sufficient income, you may need a cosigner to apply. A cosigner assumes joint liability for the debt and allows the lender to use their credit history to qualify you for the loan. The higher your cosigner’s credit scores are, the lower your refinance rates might be. 

Once you’re approved, the lender uses the proceeds from the refinance loan to pay off your current student loans. You’d then make payments to the new loan. Here’s an example of how much you could save by refinancing $50,000 in debt from 7% APR to a new loan at 5%, assuming a 10-year repayment period remaining for both loans. 

	Change	Savings
Monthly payments	Previous: $581 New: $530	⬇️ $51 per month
Cost to repay	Previous: $69,665 New: $63,639	⬇️ $6,026

Estimating the costs can help you put the benefits of refinancing in perspective. Find out how much you could save by accessing our student loan refinance calculator.

Should you refinance student loans before you graduate?

Whether you should refinance can depend on your situation. Here are several scenarios and whether we recommend refinancing. Keep reading for more about why we do or don’t recommend refinancing in each situation.

Consider refinancing while in school	Reconsider refinancing while in school
✅ Lower your interest rate or get better repayment terms	❌ Loss of federal loan benefits
✅ Switch interest rate type or move to a new lender	❌ In-school payments might be required
✅ Attending graduate school/didn’t graduate	❌ No tangible savings benefit

Reasons to refinance before you graduate

Consider refinancing if one or more of the following apply to you.

Lower your interest rate

If your student loans have a high interest rate and you can qualify for a lower one on your own or with a cosigner, it might make sense to refinance before you graduate. This can help you limit the accruing interest during your in-school deferment period.

Shopping around to compare rates from top refinancing lenders can give you an idea of what you might pay on a new loan and how it stacks up against your current loan. 

Get better repayment terms

Some private lenders—such as SoFi and College Ave—allow borrowers to make full monthly payments while they’re in school. If you selected that repayment option when you first took out your loans and now can’t afford it, refinancing could allow you to get a longer repayment term and lower monthly payments. 

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Tip

A longer repayment term often means paying more in interest. If your income increases after graduation, you may decide to refinance again to a shorter term to save on interest.

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Switch rate types

You might refinance while in school to change the type of rate on your loans. For instance, if you have a variable rate now but worry about rates increasing after you graduate, you might decide to lock in a new loan at a fixed rate. 

Attending graduate school or didn’t graduate

If you qualify for better terms on your undergraduate student loans, it could make sense to refinance now rather than waiting until you earn your graduate degree. Whether you’ll benefit from refinancing may depend on the rates you qualify for. 

Refinancing could also make sense if your enrollment status changes. Most student loans offer in-school deferment, but if you drop out, even temporarily, you can expect to start making payments within six months. Certain private lenders don’t require a degree to refinance student debt.

Move to a new lender

If you have a negative experience with your loan servicer, refinancing is an opportunity to choose a new one. When considering refinance lenders, it’s helpful to look at rates and loan terms, as well as customer satisfaction and any special benefits you might enjoy as a borrower. 

Reasons to not refinance before you graduate

Here are the main reasons to hold off on refinancing before graduation. 

Loss of federal loan benefits

We rarely recommend refinancing federal student loans while in school or otherwise because it means losing certain benefits. That includes:

• Six-month grace period after graduation
• Deferment and forbearance programs for financial hardship
• Income-driven repayment (IDR) plans
• Student loan forgiveness eligibility 

Access to deferment and forbearance programs can be helpful if you drop out of school and can’t afford payments. 

In-school payments might be required

Depending on the lender you refinance with, you may need to make payments to your new loan while in school. If you’re not working or have a limited income as a student, making payments could result in a financial strain. 

No tangible savings benefit

Refinancing student loans before graduation could help you combine multiple loan payments into one, but not everyone saves money. If you don’t qualify for a lower interest rate—or you do but choose a longer repayment term—you may net no real savings at all from your efforts. 

You might be OK with that if your main reason for refinancing isn’t to get a lower interest rate. But keep it in mind if you hope to make your student debt more affordable. 

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Tip

If refinancing may not be right for you, check out the alternatives listed below.

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Our expert advises: The effects of refinancing on credit and financial health

Erin Kinkade

CFP®

The effects of refinancing can depend on what stage of life you’re in. But overall, refinancing will cause a dip in credit score due to the hard credit check. This should last just a few months as long as you make on-time payments. If the borrower has limited income, refinancing could help ease cash-flow constraints and provide breathing room to save in a retirement account, contribute to an emergency fund, or use as discretionary funds for leisure activities or travel. 

Lenders that allow refinancing before graduation

Lenders can distinguish between students attempting to refinance while still in school and those who leave school without completing their degree. Some lenders may expect you to graduate as a condition of being approved for refinancing. Others may not require you to have earned a degree because you’ve left school. 

This can influence which private lenders you consider when applying for student loan refinancing. The following lenders are the ones we recommend if you hope to refinance your loans before graduation. 

Click each lender’s name in the table to jump to our review of its refinance options for nongraduates.

Lender	In-school refi	Non-grad* refi	Starting rates (APR)
Earnest	✅	❌	5.19%
RISLA	✅	✅	6.34%
Citizens Bank	✅	✅	7.00%

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Earnest – Best skip-a-payment benefit

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Editorial rating: 4.6 out of 5

• Available to U.S. citizens, permanent residents, and DACA recipients
• No minimum credit score required when you apply with a cosigner
• Not available in Nevada

Earnest extends refinance loans to student borrowers who have yet to graduate. It requires a college degree to refinance, but you can qualify as long as you’re scheduled to graduate by the next semester. You’ll also need to show proof that you have employment lined up within six months after you graduate.

For approval, Earnest considers credit history, income, debt-to-income ratio (DTI), and free cash flow to gauge your ability to repay the loan. It encourages cosigners but doesn’t offer cosigner release. Cosigners need at least three years of credit history and $35,000 or more in annual income. 

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RISLA – Best hardship protections

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Editorial rating: 4.4 out of 5

• Refinancing offered nationwide
• In-school repayment is optional
• No cosigner release

The Rhode Island Student Loan Authority (RISLA) is a state-based organization, but it offers refinance loans to borrowers across the country. The lender offers a specialized option for in-school students that allows them to defer their payments until six months after they leave school.

You can also opt for a loan with immediate repayment while in school to get a lower interest rate. RISLA only offers fixed interest rates with a 15-year term for deferred payment plans and 5, 10 or 15 years for immediate repayment plans. 

You must be a U.S. citizen, pass a credit check, and meet other credit-related criteria to get approved.

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Citizens Bank

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Editorial rating: 4.1 out of 5

• No degree is required if you’re no longer enrolled in school
• Cosigner release available
• Maximum refinance limits vary by degree

Citizens Bank, a national bank, will refinance school loans even if you haven’t completed your degree. However, you can no longer be enrolled in school to qualify. You must also be employed and have made 12 on-time payments on your original loan to be considered.

Citizens Bank checks your credit history, so it’s wise to review your credit score and check your annual credit report. This way, you’ll know whether you need to have incorrect information removed from your report or try to raise your score before applying. Paying down credit card debt and making additional on-time payments on your accounts will help. You can also apply with a cosigner if necessary. 

Cosigner release is an option with Citizens, which is an added benefit. You must make 36 consecutive, on-time payments of principal and interest to request cosigner release. 

Our expert recommends

Erin Kinkade

CFP®

If you’re consider refinancing before graduation, be sure you understand that although you might get potential short-term relief, the probability is that you’ll pay more in interest over the repayment term. And when you graduate and are in a better financial condition, you can refinance again to a lower interest rate—ideally—or pay off the loan earlier. (If you plan to do this, be sure you won’t get hit with a prepayment penalty. These are rare, but it’s always wise to ask.) Repaying the debt earlier will help improve your DTI, but if you can’t pay it off earlier, I would advise you keep a pulse on your DTI so you aren’t denied loans for other major goals—for example, if you wish to purchase a home with a mortgage or finance a vehicle.

Alternatives to refinancing student debt before graduation

Refinancing student loans while in school is possible, but it isn’t the only way to manage your loans if payments feel overwhelming. Depending on your situation, you may have other options to help you accomplish your goal.

Income-driven repayment

If you have federal student loans, you can wait until your repayment starts after leaving school (with or without a degree) and enroll in an income-driven repayment (IDR) plan. These plans base your monthly payments on your disposable income and household size, which could make them more affordable. 

In some cases, income-driven repayment could take your monthly payment to $0 for a period. (You must recertify your income each year.) You’ll likely pay more in interest over the long term because the repayment term will extend to 20 or 25 years, but you can get any remaining loan debt forgiven once the repayment period ends.

Make interest-only payments

If your primary concern is a high interest rate, and refinancing isn’t an option, ask your lender about making interest-only payments while in school. 

That’s just what it sounds like: making payments that only count toward the interest, not the principal. That might not seem worth it if it doesn’t reduce the principal, but it can work in your favor. 

Paying off interest as it accrues will prevent the lender from capitalizing the interest once your repayment term begins and adding it to your balance. That can save you money and keep you from ending up with an unmanageable monthly payment later. 

Request forbearance

If you’re making in-school loan payments or you’ve dropped out and can’t afford your payments, contact your loan servicer or lender to ask about forbearance options. Forbearance allows you to take a break from making payments to your student loans. 

But there’s a catch to putting federal student loans into forbearance. If you have Unsubsidized Loans, you’re responsible for paying interest that accrues on them during the forbearance period. With Subsidized Loans, the government pays the interest. 

Private lenders aren’t required to offer forbearance, but some may offer short-term relief for borrowers experiencing financial hardship. You can reach out to your lender to ask what options are available if you can’t keep up with payments. 

Apply for a Direct Consolidation Loan

If you have federal student loans and want a new loan servicer or a lower monthly payment, you can consolidate through the Direct Consolidation Loan program. 

This will allow you to get a new loan servicer and extend your repayment term up to 30 years, which can reduce your payment. 

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Tip

Longer terms often result in paying more interest over the life of the loan. You also can’t secure a lower interest rate this way. Your new loan servicer will take the weighted average of the interest rates on the loans you’re consolidating and round it up to the nearest eighth of a percent.

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Remember: You can’t get a Direct Consolidation Loan for private student loans. Those loans can only be refinanced.