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Student Loans Student Loan Repayment

Can You Refinance Student Loans After Consolidation?

Updated May 12, 2023   |   8 mins read
Written by Rebecca Lake, CEPF®  
Reviewed by Crystal Rau, CFP®
Updated May 12, 2023

If you’ve consolidated federal student loans with the Department of Education or combined your federal loans with private loans, you might wonder whether refinancing is an option. The answer is yes; you can refinance student loans even if you’ve already consolidated them.

Refinancing consolidated student loans could help you qualify for a lower interest rate or more beneficial loan terms. You may also refinance loans you’ve consolidated once with a private lender—for instance, to switch loan servicers or release a cosigner.

Refinancing consolidated student loans isn’t much different from refinancing any other student loan. Knowing what’s involved and the pros and cons can help you decide whether it’s the right move. 

In this guide:

When you should consider refinancing student loans after consolidation

Consolidating student loans can allow you to combine balances and make one single payment toward what you owe. You might have gone through student loan consolidation if you:

  • Combined all your federal loans into a single Direct Consolidation Loan to qualify for loan forgiveness.
  • Combined federal student loans and private loans into a single private loan.
  • Refinanced multiple private loans into a single loan.

Consolidating loans can streamline monthly payments but doesn’t necessarily lower your interest rate. 

Refinancing after you’ve consolidated student loans could make sense if you get a lower rate. You might also refinance to change the loan repayment term. 

When to reconsider whether refinancing makes sense after consolidation

Refinancing after consolidation may not be the best option if it won’t result in a more favorable loan payoff situation for you. 

For instance, you might think twice about refinancing after consolidating student loans if:

  • You can’t qualify for a lower rate 
  • You’d have to pay an origination fee to the new lender or a prepayment penalty to the old one
  • Refinancing would result in higher payments that aren’t sustainable for your budget

Refinancing could also be a mistake if you’ve only consolidated federal loans into a new Direct Consolidation Loan. Federal student loans offer certain protections that private loans don’t, including:

If you don’t want to lose any of those benefits, you wouldn’t want to refinance your consolidated loans. 

What if you’ve already consolidated federal loans and private loans together into a new private loan? You’ve already lost the protections above. 

However, refinancing may not be the best choice if it won’t save money with a new loan. 

How to refinance consolidated student loans

Refinancing consolidated student loans begins with finding the right lender. If you’ve only consolidated your federal loans through the government, you may not be aware numerous private lenders offer student loan refinancing. 

The process of refinancing student loans after consolidation is straightforward. 

You’d need to:

  • Decide which of your loans you’d like to refinance.
  • Compare lenders, including reviewing the interest rates, loan terms, and fees.
  • Submit an application to the lender and any required supporting documentation. 
  • Accept the loan terms if approved.

Once you accept a refinance loan, the lender assumes responsibility for using the proceeds to pay off your consolidated loans. You’d then begin paying the new loan according to the lender’s schedule. 

The most important step in the process is comparing what’s available from different lenders, specifically:

  • Refinance loan terms
  • Interest rates, including both fixed and variable rates
  • Loan fees, if applicable
  • Minimum credit score and income requirements, and whether you may need a cosigner to qualify

Most student loan lenders offering to refinance loans have an easy online application process, the ability to add a cosigner to strengthen the application, and several options for repayment terms. 

Many financial planners recommend getting multiple quotes at one time so it doesn’t affect your credit score as heavily. Then, keep a spreadsheet of the items above so you can easily compare the pros and cons.

Check out our guide to the best student loan refinance lenders to compare your options.

How often can you refinance a student loan?

The Department of Education limits how often you can consolidate federal student loans. However, there are no restrictions on refinancing student loans. You can refinance as often and as many times as you like, assuming you can qualify for a new loan. 

You can refinance student loans multiple times with the same lender or move to a different lender each time. Whether it makes sense to change lenders can depend on the rates and loan terms you qualify for, though customer service and borrower benefits can also factor in. 

How often should you refinance student loans? There is no single answer, though it’s important to consider: 

  • Whether refinancing more than once could save money, depending on how student loan interest rates are trending
  • How likely you are to qualify for the lowest rates and what you might pay in fees
  • How changing your loan terms multiple times might affect your total interest payoff and monthly payments

You might also refinance student loans multiple times to switch from a variable rate to a fixed rate, or vice versa. In terms of frequency, you could refinance as often as every few months, but it’s essential to consider the credit score implications. 

Having multiple hard inquiries on your credit report in a short time frame could cause a noticeable dip in your score. The more your score drops, the more difficult it can be to qualify for new loans at the lowest rates. Spacing out refinancing every two to three years can give your score time to recover between loans.

>>Read more: Can you refinance student loans?

Consider the following before you refinance a student loan

Before refinancing student loans after consolidating them, it’s helpful to know what to expect and what you might stand to gain (or lose). 

Consider the following before you begin shopping around for lenders. 

Which loans do you want to refinance?

Consolidating and refinancing are both methods to cut your monthly student loan payment, but you don’t have to take an all-or-nothing approach.

For example, if you owe consolidated federal and private student loans, keeping them separate could make sense. You can maintain the benefits and protections of your federal loans, which likely already have a low interest rate. Meanwhile, you could get better terms on your private loans. 

Likewise, you may exclude certain private loans from refinancing if they’re already at the lowest rates and you’re close to paying them off. You may not gain additional benefits from refinancing those loans with the rest of your private loans. 

What happens to federal student loan benefits?

As we mentioned, refinancing away from federal student loans means losing special protections and access to repayment plans that only the federal government offers. It’s important to decide what those benefits and protections are worth to you. 

Many private student loan lenders don’t offer income-driven repayment plans or student loan forgiveness, nor do many give the option to defer payments because of economic hardship. Losing these could make managing your finances more difficult if you struggle to keep up with loan payments because of a job loss or illness that keeps you from working. 

If you work in public service or qualify to get on an income-driven repayment plan, heavily consider the benefits of staying on federal loans. The amount of total forgiveness can outweigh your total payments you, even at a higher interest rate with federal loans.

How will student loan refinancing affect your credit?

Refinancing student loans often requires a hard credit check, which can appear on your credit report. The impact of inquiries fades after the first two years, but you might want to avoid losing points off your score if you’re still building good credit. 

You may also want to hold off on refinancing student loans if you plan to apply for another loan—such as a mortgage or car loan. It’s in your best interest to avoid new credit inquiries until the loan is approved, so you don’t risk losing credit score points. 

Will you need a cosigner to refinance student loans?

Having a cosigner can help you to qualify for lower refinance rates. If your credit history is limited, you may need a cosigner to refinance consolidated student loans with a private lender. 

The upside is a lower rate could save you money. 

However, consider the drawbacks, too. Once you add a cosigner to a student loan, it may be difficult to release them from the debt, although some private lenders offer the ability for the cosigner to drop off after a couple of years of good payment history. 

And if you fail to make payments on time, both your credit scores can suffer, which may harm your relationship with the cosigner.