Refinancing Student Loans to Go Back to School

Updated October 22, 2020

Many Americans, at one time or another, have thought about their student loans as they contemplate whether or not they can afford to go back to school. For some, student loans from previous schooling still stand in the way of re-enrolling. Whether you’re seeking higher education or are looking to finish your degree, exploring your student loan repayment options may help create the financial freedom you need to go back to school.

Maybe you were able to partially pay your way through college, but couldn’t quite close the gap, so you turned to federal student loans or private loans to make ends meet. You may have been accepted into your first-choice school and you made the financial leap using student loans to fund the degree of your dreams.

Whatever the case may be, you’re now in a situation where you need to change your current student loan structure in order to go back to school and take the next step in your education. From income-driven repayment options to student loan refinancing, several options are available to help you lower your monthly payments and allow you to go back to school with financial peace of mind.

Refinancing Student Loans To Go Back To School

No matter what your financial situation, you can almost certainly take advantage of student loan refinancing options through reputable private lenders such as ELFI.

Student loan refinancing can be extremely impactful if you’re looking to lower your monthly student loan payment. Decreasing your monthly loan payments may be the perfect way to create the financial flexibility you need to pursue additional education.

When you refinance, you may become eligible for a better interest rate on your existing student loans. Decreasing your interest rate lowers the amount of interest you’ll pay over the life of the loan, and also lowers your monthly student loan payment. You’ll also have the opportunity to extend your student loan repayment term, to give yourself more time to repay the original loan.

Another piece of good news is, you can refinance student loans more than once. If interest rates drop again, you may become eligible for an even lower rate. If you’re interested in going back to school, student loan refinancing may give you just the financial boost you need to make it possible.

Pros and Cons of Student Loan Refinancing

If you’re considering student loan refinancing, especially if you have a good credit score and debt-to-income ratio, you should start by researching lenders. 

Most refinancing lenders will do a soft credit pull when you submit an initial application, which won’t hurt your credit score. Most will perform a hard credit pull later if you decide to move forward with refinancing. If you aren’t yet ready to apply, you can even try a Student Loan Refinance Calculator* to see a rough estimate of the rates that may be available to you.

Here are a few student loan refinancing benefits:

• Consolidating your student loan payments makes them easier to manage
• A lower interest rate decreases the total amount you’ll pay over the life of the loan
• You’ll have the option to shorten or lengthen your student loan repayment term
• If you have a cosigner, you can opt for a student loan cosigner release to release them when you refinance your loans with a new lender
• If you need a cosigner, you can add them when you apply for student loan refinancing
• Student loan refinancing may offer the financial flexibility you need to re-enroll in school

In some cases, student loan refinancing may not be the best option. Here are a few situations in which refinancing may not be right for you:

• If you’re taking advantage of federal benefits, like income-driven repayment
• If you need time to work on your credit score to become eligible for better interest rates
• If your income is too low or not steady enough to qualify for strong interest rates
• If you may become eligible for student loan forgiveness in the near future

Can I Refinance Loans While Still In School?

If you’re a student already thinking about refinancing your loans, kudos for being so on top of things! Unfortunately, it’s hard to refinance student loans while in school because most major lenders require a degree from a Title IV school to qualify.

If you’re a graduate student, however, you may qualify for student loan refinancing as long as you meet the other requirements. Many graduate students are eligible to refinance their student loans through ELFI, and we even offer graduate school loans if you’re looking for a lender to finance your degree. Another way you may qualify to refinance your student loans while still in school is if your parents decide to explore Parent PLUS Loan refinancing.

That said, even if you don’t meet these qualifications, you can still do several things to prepare for your student loans before graduation. If you think refinancing is an option you’d like to explore, then keep your credit score high. Pay your bills on time, don’t close old lines of credit and keep an eye on your credit report. A high credit score could help you qualify for better interest rates when you refinance after graduation.

Other Ways to Get Rid of Student Loan Debt

If you need to pay down student debt but are having trouble deciding how to approach it, you have several options.

It’s important to remember, however, that a few of these options will put off your student loans but will not lower your payments in the long run. Deferment and forbearance may alleviate the stress of making payments for a while, but these are short-term solutions. 

If you’re looking for a more permanent solution that will lower your monthly payments, then explore student loan refinancing.

Student Loan Deferment

To lower your monthly payments, you could defer student loans when going back to school. Student loan deferment means that, as long as you’re enrolled as a student, you will not be required to make payments on your loans. They will, however, continue to accrue interest.

After you graduate, you’ll have a six-month grace period before you’re required to start making payments again. That said, it’s important not to forget about your loans during your grace period. Understanding student loan deferment can help you prepare to make payments after your grace period ends.

Student Loan Forbearance

If you can’t afford to make your student loan payments, you can speak with your lender about student loan forbearance. This should be a last-resort option for most borrowers, however.

Student loan forbearance means temporarily putting your student loan payments on hold for a specified amount of time. You and your lender will talk about and agree on the amount of time you’ll need to start making payments again.

The reason this shouldn’t be your first choice as a borrower is that your loans will continue to accrue interest while you’re not making payments. While the temporary break from payments will be nice, you’ll return to making payments with even more debt than before.

Changing Payment Plans

Student loan refinancing isn’t the right choice for everyone. If you have mostly federal loans, you may choose to explore income-driven repayment plans. While you’ll pay more in interest over time, sometimes it’s necessary to take steps that will make your monthly payments more manageable. 

Changing your student loan repayment term can happen through many methods, including student loan refinancing. If your budget is tight, lengthening the amount of time you have to pay back your loan can create the financial flexibility you need.

What Factors Should I Consider When Deciding on a Student Loan Refinance?

A few of the factors most graduates need to consider when refinancing their student loans have to do with not only payment size, interest rates and terms, but also the type of loan they will refinance into and their own personal financial situation. Keep in mind how this may improve your ability to get better terms or rates on your current loan or on any new student loans you end up pursuing after your refinance in order to go back to school.

For example, many graduates considering a student loan refinance in order to go back to school don’t know that there is no federal student loan refinancing program. Both private and federal student loans can be refinanced with a private lender, but neither federal nor private loans can be refinanced into new federal loans. What you started with is what you get when it comes to your federal student loan – unless you refinance with a private lender.  Federal student loan rates are set by the US congress and mandated by law – you can’t get a better deal or any rate concessions the way you might be able to do with a private lender.

Another big factor when it comes to deciding on a student loan refinance is your personal financial situation. While this is often the first question that graduates looking at a student loan refinance ask themselves, it should be asked again – can you afford new student loans to go back to school, even if you get the refinancing terms and rates you want for your current student loans? Learn about when student loan refinancing is a good idea.

Which is Right for You?

If you’re going back to school, it’s important to make an informed choice about your best financing option. Research lowering your interest rate through student loan refinancing, and consider alternatives like income-driven repayment plans.

Working with a reputable lender like ELFI can help you pick the best student loan refinancing option for you. When you refinance with ELFI, you’ll receive a Personal Loan Advisor specifically assigned to help you with questions along the way. 

Don’t take our word for it, however. Check out ELFI student loan refinancing reviews to see why our customers say they love ELFI.