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Should You Refinance Student Loans More Than Once?


Student loan refinancing involves borrowing a private student loan to pay off one or more existing student loans on better terms, such as a lower interest rate. There’s no limit to how often or how many times you can refinance your student loans, which means you can refinance again even if you’ve refinanced in the past.

Refinancing your student loans more than once can help you save money and get out of debt faster, but you should carefully consider whether it’s worthwhile to refinance before you formally apply for a new loan. Here’s what you need to know about refinancing private student loans multiple times.

When Is Student Loan Refinancing a Good Idea?

Generally speaking, it can be a good idea to refinance private student loans if you can qualify for better repayment terms. Most private student loan lenders don’t charge fees for refinancing, which means it won’t cost extra to refinance a second or even third time. Here are a few reasons you might consider refinancing your student loans more than once:

  • Your finances have improved since you last refinanced. Once you’ve graduated and secured a steady income, you may qualify for better student loan terms than when you were a student. Additionally, you may get a lower interest rate if your credit score has improved since originally refinancing or borrowing student loans.
  • Interest rates were higher when you last refinanced. Student loan rates are tied closely to your creditworthiness, but they also depend on current economic conditions. If average student loan rates are currently lower than what you pay, it may be worthwhile to refinance for a lower rate.
  • You want to change your repayment term. Shortening your repayment term will help you get out of student loan debt faster and save money on interest, but it can also result in higher monthly payments. Extending your repayment term can help you reduce your monthly payments, but it can cost you more money over time.
  • You want to remove a co-signer from the loan. As long as you meet the eligibility criteria on your own, it may be possible to refinance your student loan in your own name. Keep in mind that you might not need to refinance in order to remove a co-signer – some student loan lenders offer a co-signer release after a certain number of on-time payments.
  • You want to combine multiple private student loans into a single one. Private student loan consolidation allows you to move multiple balances into one loan with a single interest rate and monthly payment. Just be sure that you’re able to qualify for the same or better terms on your private consolidation loan.
  • You’re not satisfied with your student loan lender. Refinancing is a way to transfer your student loans to a new lender if you’re not happy with your current one. You’ll still want to make sure you can qualify for better repayment terms when you refinance, even if the new lender has higher customer service ratings.

It’s important to keep in mind that private student loan refinancing shouldn’t be your first option if you only have federal student loans. Refinancing federal loans into a private loan means you’ll lose access to government protections like income-driven repayment plans and certain student loan forgiveness programs. But if you already have private student loans, refinancing can be a smart financial move.

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Pros and Cons of Refinancing Student Loans More Than Once

Benefits of Student Loan Refinancing

  • You may save money in the short term and over time. Refinancing to a lower student loan interest rate can help reduce your monthly payments and save money over the life of the loan. Additionally, refinancing to a shorter repayment term can help you save even more money and get you out of debt faster – although your monthly payments may be higher.
  • You may qualify for discounts or promotions. Some lenders have promotional offers for refinancing your private student loans, such as a cash bonus that can be used to reduce your principal balance. Additionally, certain lenders may offer interest rate discounts, such as for autopay, that you don’t have with your current lender.
  • You can avoid paying student loan refinancing fees. Reputable private student loan lenders don’t charge application or origination fees, which means you can refinance for better terms at no additional cost. Be sure to check lender reviews and thoroughly read any loan agreement before signing on the dotted line.

Drawbacks of Student Loan Refinancing

  • You may end up paying more money over time. Especially if you refinance to a longer payment term, or even if you keep refinancing to the same term every few years, you’re extending the amount of interest payments you make. This can keep you in debt longer and increase the total amount of interest you pay. Additionally, refinancing to a variable-rate student loan runs the risk of your interest rate rising during the life of the loan.
  • A hard credit check is required. It’s possible to get prequalified for student loan refinancing with a soft credit check, but the lender will run a hard credit inquiry when you formally apply to refinance. This can temporarily lower your credit score by a few points, although it’s possible to rebuild your credit by making consistent on-time payments.
  • A new account could reduce your age of credit. Credit scoring models take into account the average age of credit, with higher scores given to those with older, well-established accounts. Refinancing will open a new account and reduce your average age of credit, which can lower your credit score.

How to Determine Whether You Should Refinance Your Student Loans Again

1. Gather Details on Your Current Student Loans

You’ll only want to refinance your private student loans if you can qualify for better repayment terms than what you have. Go through your existing loan agreements to find details including the interest rate, monthly payment and payoff date. You should also look for your remaining loan balance, so you know how much you need to borrow. If you’re consolidating multiple loans into one, just add the outstanding balances together to determine your new loan amount.

2. Prequalify With Multiple Private Lenders

Most private student loan lenders let you prequalify with a soft credit inquiry to see your estimated repayment terms, which won’t impact your credit score. Aim to prequalify through at least two lenders so you can compare interest rates and find your most favorable repayment terms.

3. Compare Offers Against Your Current Student Loans

It may be wise to refinance your student loans if you can qualify for a lower interest rate, reduce your monthly payments or get out of debt faster. Compare the new loan terms you’ve been offered for refinancing with the terms on your existing loan to see if there’s an opportunity for you to save money without extending your student loan repayment term.

You can use a student loan calculator to see how much you’d pay in interest over the life of the loan, which can help you determine if refinancing is worthwhile in the long run.



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