How often can you refinance student loans?

As long as you qualify, you can refinance your student loans as many times and as often as you’d like. There is no limit on how often one can refinance.

Taking this step makes the most sense when your finances or credit score improves or interest rates decline. Under these circumstances, it’s possible to save thousands of dollars in interest by lowering your interest rate just a few percentage points.

However, there are also situations where refinancing could hurt you more than help you.

Reasons to refinance student loans

You might want to refinance student loans for many different reasons. Refinancing allows you to replace your existing student loans with a new one from a private lender, with the main benefit being the opportunity for a lower interest rate or monthly payment. Some additional reasons you might consider refinancing include:

  • You took out a loan when interest rates were high.
  • You have a good credit score and a steady income.
  • You want to remove a co-signer from your loan.
  • You want to extend your repayment term to lower your monthly payment.

If you have all federal student loans and are having trouble making the monthly payments, refinancing shouldn’t be your first relief option. The federal government offers hardship relief, alternate repayment options and loan forgiveness that private lenders don’t offer, and all loans that you refinance will immediately become private.

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However, if you have all private loans and a good credit score, refinancing could be a smart money move, especially if you have trouble keeping up with multiple loans or have a higher interest rate. You can refinance as many times as you’d like as you improve your credit score and qualify for lower rates.

The downsides of refinancing more than once

Before proceeding with a refinance, it’s important to consider the potential drawbacks and decide whether it’s truly the right time to make this move.

Lower credit score

The biggest risk of refinancing multiple times is that it could slightly lower your credit score. While you can shop around with lenders risk-free using prequalification, most lenders will perform a hard credit check during the actual application process to see your detailed credit report and debt payment history. This allows the lender to determine whether you are considered a trustworthy borrower.

Every hard credit check lowers your credit score by a few points.

Reduces average age of accounts

The average age of your accounts also impacts your credit score. Credit scoring models prefer to see accounts that have been open for several years; if you keep replacing your student loan with a new one, your average age of accounts will stay low.

With that said, drops in credit through refinancing can be easily remedied through responsible usage, especially when it comes to a drop caused by a singular hard check. As long as you make on-time payments on your new loan, you should quickly recover any lost points.

The benefits of refinancing more than once

Under the right circumstances, such as when your personal finances have improved, or special offers are being made by the lender, refinancing can pay off.

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Better terms

You can refinance the same loan multiple times, and if you’ve already gone through the process, you’ll have a good idea of what lenders are looking for and how the process works. Refinancing more than once can help you secure a lower interest rate, better terms or a repayment timeline that suits your financial goals. All of these can make it easier to pay off your loans or make your loan cheaper in the long run.

Promotional offers

In addition, some lenders will offer special promotions or discounts for refinancing with them — if you spot a great deal, it may be worth it to switch to that company. Switching companies is also a good idea if you’ve had negative experiences with your current company or want to change loan servicers.

What to consider before refinancing your student loans again

There are a few things to consider before applying for another refinance loan, especially when it comes to the long-term impact it can have on your finances:

  • The new interest rate. Is the new interest rate considerably lower than your current rate? If not, it may not be worth it to go through the hassle of refinancing.
  • Your financial goals. Consider both your short- and long-term goals when it comes to your balance. Do you want a lower monthly payment, better terms or a rate reduction? Make sure that the lender meets your specific goals when it comes to refinancing multiple times.
  • Your financial health. If your credit is in good standing and you have a long credit history, applying for a new loan likely won’t impact your score much. You should also consider your income and whether you’re able to make your new monthly payments.
  • Fees. While many lenders have done away with origination fees and application fees, you should still check whether your new lender charges them; these fees could eat into the savings you get from refinancing.
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Next steps

Before making the jump to refinance, get prequalified with a few lenders to see what rates you’re offered. From there, you can run the numbers through a refinance calculator to see whether your new loan will be worth it in the long run. When you’re ready to refinance, you can submit an application with your lender — and have your new loan within a matter of weeks.