When To Refinance Student Loan

Refinancing student loans is a smart financial move if you’re struggling with your current loan or have fallen behind on payments. You can refinance your current loan with a private lender, often at a lower interest rate. If you think it’s time to refinance your student loans, read on for tips on when and how to do so.

When To Refinance Student Loan

You can refinance your current loan with a private lender, often at a lower interest rate.

If you have a student loan, you may be able to refinance it with a private lender. “Refinancing” means taking out a new loan to replace an older one. Refinancing can lower your monthly payment, lower your interest rate and reduce the total amount of money that you owe over time.

  • You can refinance your current loans with a private lender, often at a lower interest rate than those offered by the federal government or other state-based lenders. This allows you to save money on interest paid over time and potentially consolidate all of your student loans into one new loan with one monthly payment instead of many different payments each month.
  • If you have any private loans (those not backed by the federal government), refinancing them is usually cheaper than paying back what’s left on them by making monthly payments for years or decades into the future (though this depends on how much time remains before the debt is forgiven).

How to refinance your student loans

To take advantage of a lower interest rate and reduced monthly payments, you must first determine if refinancing your student loans is right for you.

  • The interest rate is probably the most important factor to consider when refinancing your student loans. Student loan rates are based on credit scores, underwriting requirements and other factors. To check the current interest rate on your private or federal student loans at different lenders, check out this website: https://www.loancheckup.com/. This tool will help you compare rates across multiple lenders and determine which one is best for you.
  • Check out the fees associated with each lender before signing up for new terms. Some lenders charge origination fees while others do not; however, if their origination fee is higher than other providers’ they may be able to offer better rates because they’re able to make up for it elsewhere in the loan contract (aka “making money off someone else’s misfortune”).
  • Determine if there are any prepayment penalties associated with refinancing by checking out page 13 of each state’s promissory note agreement under “Terms” section found here: https://portal2-kcet12-doe1-l3rdtpepi5tbxvzwjjgjcfyjh2n0m8aiu9fxtp7tuz0k

When to refinance your student loans

If you have high interest rates:

If you have a high balance:

If you have a low credit score:

If you have a low income:

If you are paying off a parent’s loan or co-signed loan with someone else, or if your student loans were consolidated with other debts (like credit cards):

What types of loans can you refinance?

  • Federal student loans (Stafford, Grad PLUS, and Perkins loans)
  • Federal consolidation loans (Direct PLUS, FFEL, and FFEL Plus)
  • Federal consolidation loans with a Direct Consolidation Loan
  • Private student loans (including Federal Family Education Loan (FFEL) Program loans)

How can you refinance your student loans if you have bad credit?

  • Refinancing with a non-traditional lender.
  • Looking for a lender that will consider your unique situation.
  • Looking for a lender that offers a lower interest rate and/or monthly payment amount, even if it means you’ll be required to pay more upfront.
  • Finding one who will work with you and offer flexible payment options.

What happens if you get married or divorced after you refinance student loan?

How to refinance your student loans if you get married or divorced

Refinancing your student loan becomes easier when you get married or divorced. The lender will not care about changes in job and address, but they do look at the marriage status. If any of the borrowers have changed their name before refinancing, it is essential that they verify their identities with the lenders as well as provide all required documents for verification. A borrower can also change his/her marital status after refinancing by submitting a copy of divorce decree or marriage certificate along with other required documents for verification.

When to leave your student loan alone

If you are comfortable with your current loan terms, but want to lower the interest rate, then refinancing may not be for you. If, however, you have good credit and are not eligible for income-based repayment plans that would lower your monthly payments substantially (and reduce how long it takes to pay off your loans), then refinancing could be a good option.

Federal Repayment Programs

There are several federal repayment programs available to borrowers who have federal student loans. These include:

  • Income-based repayment plans

Income-driven repayment plans base your monthly payment on your income and family size. Your loan servicer will calculate your monthly payment amount each year, which is usually between 10 percent and 20 percent of your income. For example, if you make $30,000 per year and need to repay $20,000 in student loans at 8% interest rate (about average for private lenders), this would translate into a monthly payment of $381 (8%) divided by 12 months = ~$32 per month for principal + interest due over the next 12 months). If a borrower has low or no earnings for 2 years under an income-driven repayment plan, they may qualify for zero payments during this period instead of having their existing balance grow. After making 120 qualifying payments under an income-driven option without reborrowing any money while enrolled in school full time at least half time (and meeting other requirements), any remaining balance can be forgiven after 20 years instead of 25 years under standard repayment plans

Income-based repayment plans

Although the interest rate is low on income-based repayment plans, it’s important to remember that these programs also extend the length of your loan term and cause you to pay more in interest overall. Once your student loans are repaid through an income-based plan, you may be able to refinance them into a new loan with a lower interest rate and shorter repayment period.

Student Loan Forgiveness Programs

You can also apply for student loan forgiveness programs, which allow you to repay your loans according to a schedule that works best for you. These programs are available only through specific companies and organizations, so it’s important that you do some research before jumping into them. Some of the most common student loan forgiveness programs include:

  • Public Service Loan Forgiveness Program (PSLF) – This program will forgive any remaining debt after 120 qualifying payments on federal direct loans. To qualify, borrowers must be working in public service jobs that have been approved by the Department of Education; these include teachers and social workers as well as those employed by non-profit organizations or government agencies such as FEMA or the FBI.* Teacher Loan Forgiveness Program (TLF) – This program forgives up to $17K per year for teachers who have taught full time at an eligible school for five consecutive years.* Income-Driven Repayment Plans – These plans base payments on a percentage of your income instead of using interest rates alone

Make sure that refinancing is the best option for you

If you have a low interest rate and low balance, refinancing may not be the best option for you.

If your interest rate is lower than what some lenders offer, then refinancing may not be the best route to take. This is because the majority of lenders will approve those who are currently paying high or even higher rates than those offered in the marketplace. Similarly, if you have a large balance on your loan and can comfortably make payments, then it may not be necessary to refinance at all. Here again, this is because most companies will only offer lower rates if they believe that borrowers can afford them—and would accept them—but at least one year of steady payment history with their current lender is required before approval for any type of student loan refinancing application can be granted by most lenders.


Refinancing your student loans is a great way to save money and improve your financial situation. However, it should not be the only option you consider when it comes to paying off your debt. There are other options available to help you pay off student loans, including income-based repayment plans and loan forgiveness programs. If you’re thinking about refinancing, make sure you do thorough research before making any decisions!

Add a Comment

Your email address will not be published. Required fields are marked *