How Many Times Can You Refinance a Student Loan?

Refinancing a student loan involves replacing an old loan with a brand-new one. While you might decide to refinance for a few reasons, it’s common to go this route if you want a lower interest rate or a different repayment term.

There are no restrictions on how often you can refinance your student loans. So if rates decline in the future and you’ve already refinanced once before, you can do so again, provided you meet lenders’ qualification requirements. 

Here’s what to know if you’re wondering how many times you can refinance a student loan and the benefits and drawbacks of frequent refinances.

Benefits of refinancing multiple times

As we mentioned, when you refinance a student loan, you apply for a new loan to replace an old one. Here’s a look at the benefits of refinancing multiple times.

• Lower rate: You could score a lower rate if interest rates have declined or your credit has improved since you borrowed your initial loan. A lower rate means lower long-term interest costs. 
• New repayment term: Whether you opt for a shorter or longer term, a new repayment term could be beneficial if your financial situation has changed. That said, a longer term will likely result in higher interest costs over time. 
• Lower monthly payment: If you score a lower rate or opt for a longer term, it could mean lower monthly payments. 
• New student loan servicer: Maybe you struggled with your old student loan servicer. If that’s the case, refinancing your loans with a new servicer could result in a better and smoother customer service experience.
• Easier-to-track payments: If you have several student loans, it means keeping up with several monthly payments. Refinancing several loans with one would result in fewer payments to track. You can choose to refinance all or part of your student loans. 

Since borrowers often refinance to get a lower rate, here’s what that could look like if you’re thinking of going this route. Let’s say you have:

• $24,000 in outstanding student loans
• Average rate of 7.5%
• 10 years remaining on your term 

Your current monthly payment is $285, but after shopping around, SoFi offers you a new rate of 5.6%. 

Tip

SoFi is one of the best student loan refinance companies and currently offers fixed rates as low as 3.54%.) The lower rate reduces your monthly payment to $262 and saves you around $3,000 in interest over your term.

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Potential drawbacks of frequent refinancing

Refinancing has its perks, but there’s another side to the coin. Here are some potential drawbacks of frequent student loan refinances:

• Hard credit checks: Your lender will do a hard credit pull each time you apply to refinance your student loans. While a single check may only reduce your credit score by a few points, multiple checks could do more damage.
• Could affect age of accounts: Credit scoring models also consider the age of your accounts when determining your credit scores. Closing an older account and replacing it with a new one could result in a slight decline in your scores. 
• Could pay more interest over time: You might also pay higher interest costs if you choose a longer repayment term. 
• Potential fees: Not all lenders charge an origination or application fee when you refinance, but some do. Read the fine print to determine whether you’re on the hook for any fees before you sign a loan offer. 

In my experience, the number of times it makes sense to refinance is borrower-specific. This number isn’t very relevant except for the potential impact on credit score, which may be minor compared to the benefit. I am not a fan of consolidating because it takes away the ability to use other loan payment strategies, like the debt avalanche or snowball method, by combining all your loans into one.

Michael Menninger , CFP®

What to consider before you refinance again

Besides the benefits and drawbacks, you’ll also want to look at your own financial situation and other factors before refinancing. Here’s what to consider: 

• Current rate environment: Interest rates are a key factor in your decision process. If rates were higher when you initially applied for your student loans, it could be wise to refinance now. But if rates were lower, it may not make sense. If you qualify, you can refinance student loans to a fixed rate or variable rate. 
• Credit scores: Likewise, you’ll also want to look at your past and current credit scores. Higher credit scores typically mean lower rates, so it could work in your favor if you’ve improved your credit since you first applied for student loans. 
• Overall financial health: Your broader financial health is just as important as your credit scores. Consider your total monthly debt and your earnings, and determine whether your finances are in good enough shape to qualify for a refinance. 
• Remaining loan balance and term: Understanding what you owe and how much time is left in your repayment schedule will help as you shop around for a new loan. It can inform how much you borrow and for how long.

I don’t think a certain borrower profile would benefit more from multiple refinances than others. In most cases, the purpose of refinancing is to capture lower rates, remove the cosigner, or lower the payment by extending the loan. Habitual refinancing to lower rates might demonstrate poor financial management.

Michael Menninger , CFP®

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Steps to refinance your student loan

Here’s how to refinance your student loans a second or third time—or beyond:

1. Consider the pros and cons to determine whether refinancing is the right approach. 
2. Compare lenders and prequalify for student loan refinances. (Note that prequalifying won’t affect your credit score.) 
3. Compare loan amounts, terms, and rates. 
4. Apply for a student loan refinance. (Note that you’ll need to provide proof of income, bank statements, proof of residency, and other documentation to your lender.) 
5. Review your lender’s loan offer and terms and conditions. 
6. Sign the offer if everything looks good. 
7. Your new lender will pay off your old refinance loan.
8. Get confirmation from your old lender that your old loan has been repaid. 
9. Start making payments to your new lender.