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7 Signs That It’s the Right Time to Refinance Your Student Loans

Ben Luthi
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When-Is-the-Right-Time-to-Refinance-Student-Loans

Before You Read, Lower Your Student Loan Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.
Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Refinancing student loans could help you save money on interest and reduce your monthly payment.

Depending on your financial situation and credit history, you may be able to take advantage of these benefits and more to help you pay off student loan debt more quickly while saving significant cash in the long run.

If you’re wondering when to refinance student loans — and if you even should — here are seven signs to know if you may be ready.

When to refinance student loans

Unfortunately, not everyone can refinance their student loans due to a variety of factors including credit score, credit history, and annual income.

And just because you have the ability to refinance, that doesn’t mean you’ll get better rates and terms than you already have.

So when should you refinance your student loans? Beyond just getting approved, here are some ways to tell if it could be the right solution for you.

1. Your credit score is in great shape

Unlike the U.S. Department of Education, private lenders require a credit check for all applicants and your eligibility for approval and loan terms depends on the state of your credit history.

In general, student loan refinance lenders are looking for a credit score of at least 660 for approval. But if you want to score a super low interest rate, your score will need to be higher than that.

If your credit isn’t in stellar shape, you may still be able to get approved with favorable terms by applying with a creditworthy cosigner. But cosigning a loan could have some potentially negative consequences for the person helping you out, so it’s important to weigh the pros and cons first

2. Your budget is tight

If you can qualify for a lower interest rate, refinancing can help reduce your monthly payment and save money over the life of your new loan —giving you some breathing room in your budget.

Even if you can’t get a reduced interest rate, you could extend your repayment term with the new loan which will also lower your monthly payment.

Just keep in mind that extending your repayment term means that you’ll ultimately pay more in interest over the life of your loan. Also, if you have federal loans, you can also get a longer repayment term without changing your loan’s interest rate or undergoing a credit check.

The 2 Best Companies to Refinance Student Loans

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5.48% – 8.94% APR 4

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5.28% – 8.99% APR 4
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Fixed Rate

5.19% – 9.74% APR 2

Variable Rate

5.72% – 9.74% APR 2

3. You’re experiencing a major life milestone

If you’re planning to get married, buy a house, have kids, or experience another major life moment, refinancing your student loans can provide you with a little extra cash flow to afford your new expenses.

Also, if you can manage to get a lower monthly payment through refinancing, it could make it easier to qualify for the home you want.

That’s because mortgage lenders look at your debt-to-income ratio — your total monthly debt payments divided by your gross monthly income — to determine how much house you can afford. If you can lower your student loan payment, it’ll result in a reduced debt-to-income ratio, which means you can afford more of a monthly mortgage payment.

4. You want to focus more on retirement savings

Although retirement may be decades away, the sooner you start setting money aside for that period in your life, the more time that money will have to grow. Saving now will also make it so you don’t have to put more away later in life in order to catch up.

What’s more, the stock market has historically generated higher returns over the long term — that includes both ups and downs in the market — than the typical student loan interest rate. As a result, it could make sense to reduce your monthly payment through refinancing, so you can use that extra money to invest for your retirement instead.

5. You have other savings goals

Making payments on your student loans will reduce how much you owe over time. But if you have an unexpected expense or lose your job, you can’t get that money back from the lender.

If you can manage to reduce your student loan payment every month or save money in the long term, you could gain the extra cash you need to establish an emergency fund. Financial experts recommend having three to six months of expenses socked away.

If your rainy-day fund is already robust, you could use the extra money for other savings goals, such as a home down payment or vacation.

6. You don’t like your current loan servicer

No student loan servicer is perfect, but if you’ve had a bad experience with yours (or multiple bad experiences), refinancing your student loans allows you to choose which lender you work with.

It can also simplify things if you’re currently working with multiple servicers (or lenders if you have private student loans) and want to consolidate those relationships into one — which gives you just one monthly payment to worry about.

As you’re searching, look up customer reviews and benefits offered by each lender to find the right fit for you. Once you find the right one, it could make your repayment process a lot less stressful.

7. You don’t need federal loan benefits

Refinancing federal loans with a private lender will result in you losing certain benefits. That includes access to certain loan forgiveness and repayment assistance programs and income-driven repayment plan options. Also, while some private student lenders provide deferment and forbearance options, they may not be as general as the Department of Education’s.

That said, if you don’t anticipate needing these perks now or in the future, it may make more sense to take advantage of a lower interest rate and other benefits through refinancing.

The best time to refinance student loans is when it makes sense for you

There’s no one-size-fits-all answer to the question of when you should refinance student loans.

So, it’s important to understand your financial situation and your goals. It’s also essential to take your time to shop around and compare offers from multiple lenders before you choose one.

This process can be time-consuming if you do it with each lender individually, so consider using Purefy’s Compare Rates tool to speed up the process — with no credit check required.

Simply share a little bit about yourself and your student debt, and you’ll be able to compare rate offers from multiple lenders in one place with one easy form.

Once you have an idea of what you qualify for, compare it to what you’re currently paying and determine if taking the next step and applying is the right fit for you.

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Today’s Rates Starting From 4.49% APR1

Take the guesswork out of shopping for a student loan refinance. Compare real prequalified offers from multiple top rated lenders in 2 minutes with no impact on your credit score.
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Before you go, let’s make sure is offering you the best rate.

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Answer a few questions with our easy & secure form.

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Ascent Rate Disclosure

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 12/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

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.

ISL Rate Disclosure

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.44% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.97% APR to 9.99% 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.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination 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. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. 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. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

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 10/13/2023. 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.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/11/2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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