Consider Refinancing Your Student Loans More Than Once — Here’s Why

Student loan refinancing can be a great hack to save money on interest rates by lowering your rate and saving you thousands of dollars over the life of your loan. But what if you refinanced your student loans with a company and then see another lender with a better rate? You might wonder, “Can I refinance my student loans more than once?” Read on to learn more.

Can I Refinance My Student Loans More Than Once?

Whether you see that another lender is offering a better rate or you’re just curious about all of your options, the short answer is yes — you can refinance your student loans more than once.

What’s surprising though is how few borrowers actually know that this is possible. In our recent student loan refinancing survey, we found that half of borrowers were unaware they could refinance their student loans multiple times. On top of that, 40% of survey respondents only shopped at one lender.

Student loan refinancing is all about reducing your interest rates by getting a new loan, but it comes with a price. You’ll give up federal protections, like income-driven repayment and student loan forgiveness. So it’s important to make the most out of your interest rate reduction.

That means:

1. Checking rates with various private lenders.
2. Possibly refinancing more than once.

Many times checking your prospective rate has no impact on your credit, so you can check various lenders to find the best rate. Of course, the rate you’re given is dependent on your credit. So for example, if you have a good credit score, you may be able to get more favorable loan terms and rates. But one lender may still be able to offer a better rate than another.

Why Refinancing More Than Once Makes Sense

It can be worthwhile to refinance. Even if you score a 1% drop on your interest rate as it can save you a lot over the life of the loan. If you’re happy with your lender, you might wonder why you should refinance more than once. Here are a few reasons:

• Shopping for rates doesn’t hurt your credit. Getting a rate quote involves a “soft pull” on your credit (a “hard pull” happens during the application process), so there are no adverse consequences to your credit.
• Refinancing doesn’t take long. Unlike mortgage refinancing which comes with fees and tons of paperwork, student loan refinancing, by comparison, is a breeze. The application is relatively simple.
• There are no application fees. You don’t shell out application fees every time you refinance, so it’s not like you’re at a financial loss for applying again. And with cashback refinancing bonuses, you can actually earn money.

Ultimately, refinancing a second time (or even third time) can make sense if you score a better interest rate or a better repayment term.

Let’s say you owe $50,000 and refinanced at 5% APR with a 10-year term. If you could score even a one-percent rate drop at 4% APR with the same term, you could save $2,892 in interest. If you can get an even lower interest rate offer, then you’re saving more. That's why it pays to do refinancing calculations every so often to see if you can score a better student loan interest rate. 

You can refinance student loan debt again with other lenders like SoFi, Earnest and others. But can you refinance with the same lender again? As it turns out, in most cases yes.

“An Earnest client is eligible to re-refinance their loan with us once they have made six months of consecutive on-time payments,” noted David Green, Chief Product Officer at Earnest.

SoFi allows you to refinance with them again as well.

“As a SoFi member, you have the ability to refinance your existing SoFi student loans again at any time, unlocking better borrowing terms as your career and finance progress over time.

When it comes to refinancing, the better shape your finances are in, the more likely you are to qualify for a lower rate,” explained Alison Norris, CFP at SoFi.

Whether you refinance with the same lender or not, refinancing again can make sense if your credit score increases or your credit history improves. For example, if you went from a “good” credit score (around 670 to 739) to an “exceptional” credit score (around 800 to 850). If nothing really has changed, though, it’s likely not worth it.

Another consideration for refinancing is if you want to switch from a fixed rate to a variable rate or vice versa. See which option makes the most sense for your financial situation before taking the leap.

How Often Can I Refinance Student Loans?

If you’re convinced about refinancing again, you might be curious just how often should you refinance student loans.

This answer varies on your situation (we can help you with a customized assessment), but if you do find a better rate, you can look into refinancing every few years. For example, it could be wise to refinance again after 24 months, when the hard inquiry, also known as a hard credit check, on your first refinancing loan drops off your credit report.

What To Consider Before Refinancing Again

If you’re thinking of refinancing student loans again there are some questions to consider first. For example, are there loan origination fees to keep in mind? What will your new APR be and how much are you actually saving? You want to understand how variable rate loans or fixed rate loans can affect how much you pay in interest. 

Additionally, if you have a longer repayment term you may have lower monthly payments, but you’ll end up paying more in interest over time. If your repayment term is shorter, you’ll pay less interest over time, but your student loan payments will be larger. If your loan is close to being paid off or if you have a small balance remaining, refinancing might not be worth it.

Although there’s less risk going from one private student loan to another private student loan, each lender has different benefits. Know what you might be giving up by switching to a new lender.

You also want to look at eligibility requirements, review potential downsides, and calculate your monthly debt payments. For example, higher monthly debt payments could affect your debt-to-income ratio which could affect getting a mortgage.

Look at your monthly income and long-term financial goals as well to choose the right student loan consolidation option for you. Also, check to see about repayment plan options and if there are borrower benefits such as deferment and forbearance. Once you’ve considered all of these factors, you can make the right decision for you.

FAQs

Can I consolidate student loans twice?

If you consolidate with a Direct Consolidation Loan, you can only consolidate once. However, if you consolidate with a student loan refinancing lender you can consolidate more than once.

Does refinancing student loans hurt your credit?

When you refinance your student loans, there will be a hard credit check that may result in a small drop in your credit score. But the drop isn't very significant. If you miss a payment, it can hurt your credit.