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If you’ve refinanced your student loans already, you may assume you can’t refinance them again. But that’s actually not true. You can refinance your student loans as often as you’d like, as long as you qualify.
Not only can you refinance your student loans more than once, but often you should. Doing so can help you save on interest costs and you can choose a new repayment term that fits your current budget.
You can check out our Best Places to Refinance Student Loans Guide to see our top choices or continue reading to learn if refinancing your loans again makes sense for you.
On this page:
- Key Points of Refinancing Multiple Times
- Benefits of Refinancing Multiple Times
- Downsides of Refinancing More Than Once
Compare Student Loan Refinancing Options
Key Points of Refinancing Your Student Loans Multiple Times
There is no limit to the number of times you can refinance your student loans. As long as you are eligible, you can choose to refinance again which may help you save on interest costs.
If you are thinking about refinancing federal student loans, be sure you understand what you will be giving up. Since your refinance loan will be private, you will no longer have access to income-driven repayment plans, most student loan forgiveness programs, and financial hardship protections.
Refinancing your student loans will also likely have a minimal impact on your credit score. It may temporarily reduce your score by a few points if the lender performs a hard credit check and, if you get a new loan, it’ll reduce your average age of credit.
Benefits of Refinancing Student Loans Multiple Times
The benefits you’ll get from refinancing student loans multiple times will vary depending upon your personal situation, current loan terms, and goals for refinancing. Here are some of the biggest benefits associated with refinancing a loan more than once.
Save on Interest Costs
If interest rates have fallen since the last time you refinanced your loan or if you have a better credit score, refinancing could allow you to get a lower rate than what you’re currently paying.
Dropping your rate even a small amount can save you a lot of money, especially if you have a high balance. This is the main reason why borrowers choose to refinance.
Earnest consistently has some of the lowest student loan refinance rates and is also our top-rated lender overall. We recommend checking them out first if you want to lower your rate.
Switch Interest Type
Refinancing could also allow you to switch from a variable interest rate to a fixed rate or vice versa.
Fixed rates stay the same over the life of the loan, meaning your monthly payments and total costs will be predictable. Variable rates, which typically start out lower than fixed rates, rise or fall according to a financial index meaning your total loan cost and payments may vary month-to-month.
If you’re worried about the uncertainty of your variable rate or you think interest rates will be going up, refinancing to a fixed rate could be smart. Or, if you have a fixed rate but think you could save by switching to a variable rate, that may be a good choice despite the added risk.
Switch to More Beneficial Loan Terms
Refinancing also allows you to change other terms and the repayment plan of your loan. For example:
- You could change the timeline you have to repay your loan. If you currently have a loan you’re scheduled to repay in five years, you could change to a new loan with a 10-year repayment term. This would reduce your monthly payments, though it would also increase the total cost unless you can receive a substantially lower interest rate.
- You could get better benefits on your new loan. A new loan may offer more options for forbearance, free career counseling, or an autopay discount that your current loan doesn’t offer. There are many borrower benefits, which vary from lender to lender.
Refinancing Allows You to Switch Loan Servicers
If you’re not happy with the customer service your current servicer is providing, refinancing allows you to get a new one. Just be sure to check reviews and the Consumer Financial Protection Bureau’s Complaint Database to make sure the new servicer has a good reputation.
You Can Consolidate Your Student Loans
You can consolidate multiple federal and/or private student loans when refinancing. This simplifies repayment because you will just have one payment to worry about each month.
Refinancing Allows You to Release a Cosigner
If you currently have a cosigner on your loans, you may be able to release them from their shared responsibility when refinancing. This may help them become eligible for other types of loans and means they will no longer be affected if you miss payments.
Sometimes, your current lender will allow for a cosigner release after you make a certain number of payments, but if your lender doesn’t or if you don’t want to wait, refinancing could be the answer.
ELFI is one lender that allows you to release your cosigner in addition to allowing you to transfer Parent PLUS Loans from your parent to yourself. These options can release your parent from their responsibility for the loan they took out or cosigned on your behalf.
Downsides of Refinancing More Than Once
While refinancing multiple times has some clear advantages, there are also some potential downsides to consider.
You May Have to Pay Fees During the Refinancing Process
Though it is very uncommon, some lenders may charge prepayment penalties to pay off existing student debt. Or you may be charged application fees or origination fees. If there are fees, it may not make financial sense to refinance unless you can drop your rate by enough to make up for them.
If You Refinance Federal Loans, You Will Lose Certain Benefits
If you refinance federal student loans, you will no longer have access to income-driven repayment plans, student loan forgiveness programs, and forbearance and deferment protections that the government provides.
If you currently depend on these or think you will in the future, it is in your best interest not to refinance your federal student loans.
Your Credit Score Could Be Damaged
When you apply for student loan refinancing, you will likely get an inquiry on your credit report. This will stay on your credit history for two years and will slightly reduce your credit score.
You should minimize the impact of refinancing by shopping among lenders that give you rate estimates without doing a hard inquiry.
Opening a new account by refinancing will also reduce your score a bit because having a newer account means your average age of credit is lower. A longer average age of credit is better because it shows you’ve been responsible in paying your debt.
You Could Cost Yourself Money in the Long Run
It typically only makes sense to refinance if you’re able to get a loan that will cost you less in the long run.
If you extend your repayment term when refinancing, you could also end up costing yourself money—even if your interest rate is lower. That’s because the longer it takes you to pay off your loan, the more interest you pay and the higher your total loan costs may be.
Think seriously before applying for a loan with a longer repayment term than you have now, as you don’t necessarily want to lock yourself into higher costs and a longer timeline to become debt free and continue making student loan payments.
Refinancing Multiple Times Is Fine—If You Get a Good Deal
If you’ve already refinanced your student loans once and you’re thinking about doing it again, it may be a viable strategy depending on your situation. There are plenty of legitimate reasons to refinance your loan multiple times and it may be a more common practice than you think.
Before you refinance again, be sure to research your options. Compare eligibility requirements, interest rates, fees, and benefits before making your decision.
Author: Christy Rakoczy