Can You Refinance Student Loans More Than Once?

Kathryn Morstad

Most people initially use student loans to fill gaps in their educational funding. In fact, almost 70% of bachelor’s degree recipients leave school with student loan debt averaging about $29,000. 

Recent statistics show that upon graduation, people are starting out with more student loan debt than at any other time in history. 

It’s no wonder people are anxious to figure out when to refinance student loans and whether you can do it twice or even multiple times as advertised rates drop. The good news is: you can refinance your student loans as often as you wish, without any fees or prepayment penalties. And if your income and credit score increase, you may qualify for lower rates on your next refinance.

Can I refinance student loans more than once?

Yes, refinancing is your choice, and you can choose to refinance whenever you want as long as you have strong credit and a good, steady income. In fact, if you have previously (and successfully) refinanced your student loans, then you are already a bankable candidate!

However, before you take the plunge make sure it makes financial sense. Just because you can, doesn’t always mean you should.

First, figure out what your financial goals are — are you looking to save money on your monthly payments or over the life of the loan? Do you want to change your loan repayment terms? Are you now in a position to increase your monthly payment and want to pay off those loans more quickly? Do you have a cosigner on your loan that you want to release, but your current loan doesn’t allow it?

If you can significantly improve your overall financial situation, then refinancing student loan debt can be an excellent choice whether it’s your first time or you’ve refinanced before.

What are the benefits of refinancing student loans again?

When you ask can you refinance student loans more than once, the answer usually relies on whether the benefits outweigh the downside of staying put.

Refinancing can lower your interest rate which saves you money over the life of your loan, as well as on your monthly payments. Depending on the difference between your current rate on existing loans and the rate you can qualify for, this can add up to thousands of dollars.

When you refinance, it can also allow you to customize your repayment terms to better fit into your current lifestyle. Things may have changed significantly in your personal circumstances — you may have gotten a better job paying more money or paid off some debt that improved your credit history.

Any of these things would allow you to score a better interest rate and save money while allowing you additional resources for things like buying a house, starting a new business, or establishing an emergency fund for life’s unknowns.

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Are there any cons to refinancing student loans again?

Refinancing student loans with reputable lenders typically won’t carry any fees associated with applying for the loan or acquiring the financing. In fact, most lenders offer lending packages with no origination fees or pre-payment penalties.

However, if you extend the terms of your loan you can end up paying more interest in the long run — even with a lower rate. For example, if you have a loan for $30,000 and are paying 6.5% interest, your monthly payment would be $586.98. The interest paid over the life of the loan would be $5,219.07.

If you refinance the same $30,000 at 3.0% and extend the payments to 15 years, you will only pay $207.17 each month but will pay $7,291.41 in total interest — an increase to interest costs of $2,072.34. You could, however, opt for a shorter repayment term, and you may be able to lower both your payment and total interest at the same time.

Another consideration is your loss of financial flexibility if you shorten the term and absorb higher monthly payments. These higher payments take an additional piece of your expendable income which could land you in financial trouble if your needs unexpectedly change.

Last consideration — you can negatively impact your credit score by having multiple inquiries from lenders as you research and explore your options. The good news is that using a rate comparison tool eliminates the need for more than one lender to hard pull your credit report when you are researching rates and selecting your loan package. The effects of credit inquiries on your score is generally fairly small.

By entering some simple, quick information, you can compare rates from numerous qualifying lenders at no obligation and with no impact on your credit report.

In short, always consider the impact of refinancing on your other financial priorities.

How often should you refinance student loans?

When you ask yourself the question, “How often can you refinance student loans?”, remember it’s a personal decision. There are no limits on the number of times you refinance your student debt. However, all things being equal, unless there are financial benefits to going through the refinance process, it may not make sense for you personally.

Did you know? Comparing your prequalified refinance rate options only takes 2 minutes.

If you’re interested in saving money, use our rate comparison engine to quickly see real-time rate offers from industry-leading lenders.

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Who should consider refinancing student loans more than once?

Any time there is a significant change in your personal financial circumstances, you may be presented with a great opportunity to assess the financial landscape and see where improvements can be made.

If you have been impacted by any of the following changes, like a boost in income or getting married, now may be a terrific time to refinance your student loans to get a better rate or terms.

Change in income

If you have recently received a promotion or substantial raise, or if you have changed jobs for a more lucrative opportunity, you may want to explore refinancing your loans again. Keep in mind these new parameters change the game and can score you a much lower interest rate.

The ultimate goal is to pay off student loan debt as quickly as possible for your particular financial circumstances. If you experience a sizable increase in your monthly income, you may be able to consider shortening the terms of your loan with a higher monthly payment and ditching your debt faster than you planned.

Paying off a student loan refinance more quickly opens up tons of possibilities for redeploying your assets not to mention it just feels great!

However, remember that one-time situations should not be factored into your refinancing plans. Things like a one-off annual bonus or a windfall in the stock market cannot be used as part of your monthly income calculation. Lenders will only use ongoing income that can be counted on as they evaluate your ability to pay back your debt.

You can, however, use a one-time bump in income to pay down your principal balance as long as your current student loan doesn’t have a pre-payment penalty.

Change in credit history

If you have had a significant improvement to your credit score, that can signal a good time for a refinance. It can be especially impactful if you have moved from a lower category to a higher category in terms of creditworthiness.

For example, if you previously had a score of 700 (good) when you refinanced your student loans and have since moved to a score of 750 (very good), then your chances of getting a better interest rate and more favorable terms have gone up dramatically.

Here are the categories and score ranges as defined by FICO. FICO scores are used by over 90% of lenders then they determine your ability to repay your loans.

                        Very Poor                    300 – 579

                        Fair                              580 – 669

                        Good                           670 – 739

                        Very Good                   740 – 799

                        Exceptional                 800 – 850

While each lender has lending practices and parameters that are defined by their internal governance or Board of Directors, most lenders use 670 as the lowest score they will consider. And even though that score may be good enough to qualify for a loan, it will not get you the best interest rate and terms. When it comes to credit scores, the higher the score the lower the rates — hard stop!

Newly married and want to consolidate?

Often when people marry, one or both bring outstanding student debt or previously refinanced loans to the table. Today, PenFed Credit Union allows spouses to combine their student loans into one refinanced package. This allows households where one spouse makes significantly more income to share their combined buying power.

With these types of loans, you can use your combined income for qualifying purposes. But the lender will use the credit score from the person with the highest rank to determine the cost of the loan. In fact, this can work well when one person is a stay-at-home parent and the other has a career with a strong income.

If there is a reason to keep the loans separate, but you still want to recognize the lowest rate possible, one spouse can cosign for the other spouse. The obvious drawback to this arrangement would be if the relationship took a turn for the worse. The loan holder could choose not to make payments and negatively affect the cosigner’s credit.

Releasing a cosigner

If you used a cosigner to secure your current student loan, you may be in a position now where you can assume total responsibility for the debt. In this case, you want to get a cosigner release. Some lenders allow a co-signer release after a certain number of payments have been made on time (usually around 12).

But what do you do if your current lender doesn’t allow for releasing cosigners? You can always refinance the loan again and negotiate the terms based on your new criteria. This frees up your cosigner to focus on their own financial goals and helps you to continue to build positive credit history.

What are the eligibility requirements for getting a lower rate?

Before you sit down to check out your options on refinancing student loans, take an unflinching look at your current eligibility. Can you demonstrate the type of character and creditworthiness that will attract the right lenders? Remember, this is an unsecured loan — meaning there is no collateral guarantee to offset the lender’s investment in the event of a default.

Lending companies will take several factors into consideration and have developed underwriting standards that include algorithms and computer modeling to remove subjectivity from the equation. These banks want to do business with you, but they also have to protect their assets to remain viable.

When refinancing student loans, lenders look at your credit score, income and employment history, and debt-to-income ratio. However, they also look at what school you went to and the degree(s) achieved. If you have student loans but didn’t complete a degree program, you can still refinance but may have a smaller pool of lenders expressing interest.

Credit score

Your credit score represents your lifelong credit history and is your calling card or reference when presenting yourself to the financial industry. We talked earlier about the scoring categories, but how is your overall score factored in the first place?

  • Payment history (35%) — Your payment history reflects the number of payments you make each month that are on time. Each lender you do business with reports that information to the credit companies monthly. If you have made delinquent payments in the past, this will negatively affect your credit score and will be shown on your report for seven years.

  • Credit utilization (30%) — Lenders are interested in the credit you have previously obtained and how you have paid that debt, but they are also keen on how you manage your overall available credit. Your credit utilization rate (or ratio) looks at your revolving credit balances as compared to the credit you have available. Ideally, this number should be below 30% (with anything under 10% viewed as excellent).

  • Age of credit accounts (15%) — The longer your accounts have been open, the better your “credit age”. Lenders want to see a history of good credit behavior so older accounts that have been well-managed carry weight in the overall credit score. Conversely, when you open too many small accounts at once it can be seen as a negative.

  • Credit mix (10%) — Having both revolving and installment types of accounts is important to demonstrate creditworthiness. Revolving accounts include credit cards, gas station cards, and home equity lines of credit (HELOCs). Installment accounts include home mortgages, car loans, and, of course, student loans.

  • New credit inquiries (10%) — A credit inquiry (or hard pull) happens when a company or person requests to view your credit report. Too many hard pull requests can have a detrimental effect on your credit score and stay on your credit report for at least two years. Soft pull credit checks can happen when companies want to take a look at your credit history to assess for things like employment, credit card offers, etc. They do not impact your credit score.

Not every lender reports your credit information to all three credit agencies. There will often be differences in your credit score between the three reporting bureaus. That’s why it is important to check your credit report annually and follow up on any discrepancies to ensure the cleanest report possible.

Income and employment history

Lenders base your creditworthiness on your ability to pay the loan back. Income and your history of employment are a large part of that decision. At a bare minimum, lenders want to see at least an annual salary of $40,000 per year.

You need to be able to demonstrate sufficient income to pay all of your bills as well as have a long-term history with your present company. Just like an employer, lenders don’t want to see someone who hops from job to job.

Debt-to-income ratio (DTI)

The debt-to-income ratio or DTI compares your monthly debt payments to your total gross income as a measure of your ability to pay. Lenders often use a 28/36 rule, meaning that you should spend no more than 28% of your gross monthly income on housing expenses and a maximum of 36% on debt service (including all revolving and installment payments).

School and degree

Many lenders in the refinance market will want to see where you went to school and what type of degree you received. More advanced degrees, like graduate school, law, or medicine, carry additional weight and can get you a lower interest rate.

Why are student loan refinance rates currently at all-time lows?

The US is experiencing the lowest interest rates in history which makes this the best time to refinance student loans. With average existing federal loan rates currently at 5.66%, refinancing could land you with a student loan refi rate starting as low as 1.88% (as of time of writing).

Student loan refinance rates are currently at all-time lows — but that won't last for long.

Similar to mortgage refinance rates, student loan refinance rates are now at dramatic lows. Don’t wait to see if you qualify for a major drop in interest.

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But why are interest rates so low and how long will they last?

The Federal Reserve Bank (the Fed) sets policy on the Federal Funds Rate or overnight funds rate — the rate that banks charge each other in the overnight market. From there, lenders develop the prime rate which is the rate they charge their most valuable and creditworthy corporate clients. Next, commercial and retail rates go up from there based on an applicant’s credit score and history, etc.

Due to the current economic landscape, the Fed has dropped the Fed Funds Rate to 0.00-0.25% with the outlook that it will stay there for the immediate future. This is driving record lows in refinancing rates and allowing you to save money.

However, as the economy improves, the Fed will start to raise interest rates as a way to prevent an “overheated” economy and its associated higher inflation. That will mean the cost of refinancing will go up as well as interest rates increase.

Why now is the best time to refinance student loans again

Now is the perfect time to compare your current interest rate to the rate you are being offered based on your immediate circumstances. You can take advantage of the historic lows while customizing your repayment terms to meet your new reality.

How to compare prequalified student loan refinance rates

Rather than take time to research and investigate each individual lender that you find online and apply for preapproval, Purefy has developed a rate comparison tool that will do the leg work for you.

You provide some minimal personal information, and our tool will provide you with a list of preapproved offers from our top-tier lending partners.

You will have the information you need to compare rates, terms, and additional perks by the lender so that you can make a fully educated decision. Once you have made your selection, we have student loan experts who can help you with the loan application process and answer any questions you may have about refinancing your student debt.

To Sum Up

Refinancing student loans can be done as often as it makes financial sense — there is no limit. If you have already refinanced student loans in the past, you may be able to qualify for even lower interest now. That can save you money on your monthly payments and over the entire life of the loan.

Key rates have dropped to historic lows and lenders are eager to do business with qualified people. Plus, if you have already refinanced your loans before, then you’re looking at a great candidate who can qualify for the best rates available.

Can you refinance student loans more than once? Absolutely. Especially with the right mix of excellent credit, strong income, and Purefy’s rate comparison tool.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.72% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.39% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

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ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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