When Is The Best Time To Refinance Student Loans?

Refinance student loans at the best time

Flickr user Pete B.

For many students, one of the more popular reasons to refinance is to save money on student loans, but as with most student loan options, it should be chosen carefully. Refinancing can help you improve your current financial situation but only if you refinance student loans at the right time.

When to Refinance Student Loans

The best time to consider refinance (and consolidation) your student loans is after you have started earning a stable income and you have managed to build your credit history. Lenders offer better interest rates to borrowers who meet these two requirements. The earlier you refinance your loans at a lower rate of interest, the more you will save in interest payments.

However, this can take a few months to a year after graduation as you have to wait till you start earning a steady income and have had some time to build your credit history. You will find it difficult to refinance immediately after graduation and even if your request is approved, you will pay a much higher student loan interest rate, which may not be worth it.

Consolidate private and federal loans

Fixed rates from 2.44% - 5.97% APR with auto-debit

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Understand the Downside of Refinancing

Refinancing is only done by private lenders. This means if you choose to refinance your loans you will lose access to all benefits associated with federal loans such as student loan forgiveness programs and income-driven repayment plans. If you are eligible for these benefits and wish to use them, then refinancing is not the right option for you. You should choose to refinance your federal student loans only if you are sure you will not want either of these two options.


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.88% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.64% - 5.65%*
Fixed APR: 2.25% - 5.75%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.96% - 7.02%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 5.97%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 5.33%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.84%*
Fixed APR: 2.99% - 4.94%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

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