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Student Loan Refinancing

How Often Can You Refinance Student Loans?

January 14, 2020

Refinancing your student loans is a great way to consolidate your loans into one simple payment and bring your interest rate down. What if, however, you refinance your student loans and then interest rates drop again? If you’ve already refinanced, can you refinance more than once? 


In today’s blog, we’re excited to teach you about the many benefits of student loan refinancing, as well as when refinancing might be right for you. Even if you’ve already been through the process once, understanding the factors that impact the rates you’re offered is a great way to lower your rates even further. Taking the right steps to prepare before refinancing could mean extra savings and more financial flexibility.


What is Student Loan Refinancing?

Student loan refinancing means a lender pays off your current loan with a new loan you borrow. You can refinance with your current loan provider or refinance student loans with a new company.


It’s also possible to refinance multiple loans into a single payment through student loan consolidation. Consolidating your student loans with a new lender is a great way to streamline the repayment process, especially if you’re keeping track of multiple lenders and deadlines. You can even consolidate both federal and private loans.


That said, some borrowers are confused by the differences in student loan consolidation vs refinancing. Although you can choose to consolidate your student loans when you refinance, you do have the option to refinance specific loans without consolidating all your payments. For example, you can choose to refinance only your private loans if you’re taking advantage of a federal loan benefit like an income-driven repayment plan.


So when should you look into refinancing? As soon as possible, depending on some factors discussed below. Interest rates change with the market, and the longer you wait, the more savings you could be missing out on. You can refinance student loans as often as you find it beneficial, as long as your financial situation qualifies you for refinancing.  


>> Related: LIBOR: What It Means For Student Loans


How Many Times Can You Refinance Student Loans?

Although you can refinance multiple times, before searching for a new lender, take a moment to consider whether refinancing again will help accomplish your financial goals. If you notice lenders are offering low rates and your credit score is strong, now could be the perfect time to refinance again. Additionally, if you want to accomplish a more immediate financial goal like buying a house or launching your own business, then refinancing may enable you to select a longer student loan repayment term.


On the other hand, if your credit score could use some improvement, you may want to wait until you can optimize your chances of receiving the best possible interest rate before refinancing again. Also, if you notice interest rates have gone up, then it may be wise to hold off on refinancing for the time being. Knowing when and when not to refinance your student loans again is a great way to ensure you’re making a choice that will benefit your long-term financial goals.


How Often Should You Refinance Student Loans?

You can refinance student loans multiple times. Before refinancing again, however, be sure to consider whether the time is right for you. If you refinance your student loans more than once, you will be impacting your credit score, so make sure only to do so if you will be saving a significant amount of money. While many lenders will do a soft credit check to determine the appropriate rate estimate, moving forward with the refinancing process does require a hard credit check.


Fortunately, credit checks have small and short-term impacts on your overall credit score. If your score is in good shape and refinancing will help further your long-term goals, then it’s likely worth the temporary dent. If you need a little more time to boost your credit, however, then take the time you need to adequately prepare. Refinancing with a strong credit score will increase your chances of receiving a better rate, so your efforts will be rewarded.


Here are some instances when you should consider refinancing your student loans again: 

  1. When you find a lower interest rate on student loans – Interest rates rise and fall with the market. If you initially refinanced when student loan rates were higher, check again when rates drop. It may be months or even a couple of years, but a lower interest rate is sure to save you money on your monthly payment.
  2. If your credit score has improved to qualify you for a lower rate – Did you clean up your credit and raise your score from when you initially refinanced? Having a higher credit score could make you eligible for a better interest rate.
  3. When your income has increased – Having a higher income can help reduce your debt-to-income ratio, thereby making lenders more willing to offer you a lower interest rate.
  4. If you have a variable interest rate and need steady payments – Refinancing student loans again to a fixed rate could provide ease of mind that your payment can’t go up because your interest rate goes up.


Factors to Consider Before Refinancing Student Loans Again

To maximize your refinancing success, take the time to adequately prepare before signing on the dotted line. By learning about the factors that impact your rate estimate, you’ll have the tools you need to earn the best possible rate on your loans.


Check Your Credit

Some lenders require a credit score in the 600s to refinance your student loans. To earn the best possible interest rates, however, you should aim for a credit score in the 700s or higher. Individuals with higher credit scores qualify for lower interest rates, so improving your credit gives you the best possible chance of decreasing your interest rate. To check your credit score for free, visit AnnualCreditReport.com.


Your credit score is based on several factors, the most important of which is payment history. Making on-time payments on your student loans, credit cards and other regular bills will help keep your score high, or raise it if it needs a boost. Additionally, paying down debt is another effective way to raise your credit score. For more information about improving your credit score, check out our guide for tips on building good credit.


Consider Your Financial Situation

To achieve the best possible interest rate, you must also prove that your income is high enough to cover your loan payments and any other debt. This means lenders will calculate your debt-to-income ratio. Your debt-to-income ratio is obtained by dividing the total of your monthly loan payments by your monthly income. For example, if your monthly student loan payment is $500, your car payment is $400, and you earn $3,000 per month, your total monthly debt payments are $900. Your debt-to-income ratio would be $900/$3000 = 30%. Generally, a debt-to-income ratio of 50% or less is needed to refinance.  


As your income increases and your debt decreases, your debt-to-income ratio will improve. If you’re earning more now than you were when you last refinanced your student loans, you may be eligible for lower interest rates. If your income is similar to the last time you refinanced, consider paying down higher-interest debt, like credit card debt, to boost this metric. 


Loan Terms and Fees

Before refinancing, be sure you know your current loan term and interest rate. If you’re looking to pay off debt more quickly, a short repayment term may be the best fit for you. If you’re working toward other financial goals and need more financial flexibility, then you may choose to opt for a long repayment term. You can also choose between a fixed or variable interest rate to find the best fit for you.


Here’s how choosing the right student loan repayment term can impact your monthly payment: 


A private student loan of $20,000 with an interest rate of 8% for ten years will require you to pay $243 per month. Refinance the loan to a ten-year loan with a 3.99% interest rate, and you could be saving $40 per month and $4,831 over the life of the loan.  


Whether you’re looking for a variable or fixed rate or a shorter or longer-term payment plan, a good refinancing company will offer different refinancing options to suit your situation. Should you choose to refinance student loans with ELFI, you can choose from repayment terms of 5,7,10, 15, or even 20 years.*


It’s also important to be aware of any fees you’ll incur when refinancing, like origination and prepayment fees. Some lenders charge origination fees as part of the cost of processing your loan application. If your lender charges prepayment fees, it means you’ll pay a penalty for making all or part of your loan payment early.


While these fees may seem inconsequential at first, they can become a hassle for borrowers who want to pay down their student loans as quickly as possible. With ELFI, you won’t pay an application fee, origination fee, or a penalty fee for prepayment*. Your focus and hard-earned money should go to paying off your student loan debt, not fees. 


If you are interested in learning how much you could save by refinancing with ELFI, check out our student loan refinancing calculator.*

Switching Loan Servicers

Be wary of companies that are new to the industry and have little information available outside of their own website. As the student loan refinancing industry grows, it can also become a target for phishing attempts and scams. It’s important to safeguard your personal information and only to share your financial details with a legitimate, reputable lender. ELFI has earned an “excellent” rating by review site Trustpilot and been awarded NerdWallet’s BEST Refi for Customer Service award for 2019.

As you refinance, you may have questions or concerns come up that no chatbot can help with. Be sure the company you refinance with has a good support team who can advise you through the process. At ELFI, you would be connected to a Personal Loan Advisor who will guide you through every step of the way.


>> Related: What’s So Great About an ELFI Personal Loan Advisor?


Adding or Releasing a Cosigner

If you’re having difficulty meeting the requirements to refinance your student loans, you may want to consider adding a co-signer. By choosing a co-signer with a high credit score and a low debt-to-income ratio, you may improve your chances of being approved for student loan refinancing. Alternatively, if your financial situation has improved and you’d like to remove a cosigner from your loan, refinancing often provides the opportunity for cosigner release.


Bottom Line

Refinancing student loans can be a great option to save money on your monthly payment and interest costs over the life of the loan. Because you can refinance more than once, refinancing your student loans multiple times can be a great way to lower your interest rate further or change your repayment term.


Before committing to a new lender, however, do your research to be sure you’ll receive the financial benefits that make refinancing worth your time and effort. Understanding your credit score and debt-to-income ratio, as well as watching out for unnecessary fees, will help you to choose the right loan servicer. Knowing when to refinance student loans is one of the best ways to continue working toward your financial goals.


Be aware that when you are shopping around for rates at different companies, this could impact your credit score. When a company is requesting to view your credit report, this is known as a hard inquiry. Too many hard inquiries can impact your credit score. However, if rate shopping is done within a small time frame, it may only count as one inquiry and may not affect your score as much. Prequalifying for student loan refinancing, however, is considered a “soft inquiry” and will not affect your credit. 

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Engineering School Student Loan Refinancing

Student loan refinancing is a fantastic option in many high-earning professions, and engineering is no exception. Most engineering students pursue bachelor’s degrees, and the average engineer’s student debt falls roughly in line with the national average of $35,173.    While engineers work hard to earn their degrees, the payoff is oh, so worthwhile. The average entry-level salary for engineers is $57,506, and the average salary across all experience levels is $79,000. This varies by the type of engineering you choose, as well. Big data engineers are among the highest-paid in 2020, with a median salary of $155,000.   Engineering students are often top candidates for student loan refinancing because of their low debt-to-income ratios. Here are a few more things you should consider refinancing your engineering student loans:  

Benefits of Student Loan Refinancing for Engineers

Student loan refinancing is a strategy that can help engineers better manage and pay off debt. When you refinance your engineering student loans, a private lender will “purchase” your debt from your original lenders. You can request rate quotes from several different lenders, then refinance with the one that offers you the most competitive rate. Decreasing your interest rate means you’ll pay less over the life of the loan.   Here are just a few of the benefits of student loan refinancing for engineers:
  • Ability to consolidate student loans into one monthly payment
  • Option to choose between fixed and variable student loan refinancing interest rates 
  • Chance to earn a lower interest rate, potentially lower than federal student loans 
  • Opportunity to change your student loan repayment term
  To see how much you could save by refinancing your engineering student loans with Education Loan Finance, try our Student Loan Refinance Calculator.*  

How to Refinance Engineering Student Loans

Refinancing your student loans is normally a quick and simple process, and you can apply in minutes at home. If you’re curious about the process of refinancing, take a look at our student loan refinancing guide.   Researching lenders has very few downsides. Most lenders prequalify applicants using a soft credit check, which won’t hurt your credit score. Just know that before you can officially refinance your loans, your lender will likely need to do a hard credit check.   Here are the next steps to take if you’re thinking about refinancing your engineering student loans:
  • Figure out which how much or which loans you’d like to refinance. 
  • Make sure you meet student loan refinancing eligibility requirements.
  • Shop around and compare pre-qualified rates from multiple lenders. 
  • Submit an application to refinance your student loans 
  • Finalize the loan application by reviewing the loan terms & signing the documents provided by the lender. 

Alternatives to Pay Off Engineering Student Loans

If student loan refinancing doesn’t seem like the right fit, you have plenty of alternatives to explore. From student loan assistance to student loan forgiveness, engineers may qualify for a variety of repayment options.  

Student Loan Forgiveness for Engineers

  Select engineers may qualify for Public Service Loan Forgiveness (PSLF). If you do qualify, you’ll make payments for a specified amount of time, normally 10 years, then the remaining balance will be forgiven. You will, however, still have to pay taxes on the forgiven amount.   Here are a few ways in which engineers may qualify for Public Service Loan Forgiveness:
  • Working in areas of national need could provide up to $10,000 in loan forgiveness over five years of service
  • Working for a non-profit, government agency, or other eligible employers could provide loan forgiveness after 120 payments (10 years)
  • Working as a teacher could provide up to $17,500 in loan forgiveness if working at a low-income school or other eligible agencies
  If you aren’t sure which is right for you, research student loan refinancing vs. PSLF. While both may help decrease your debt, it’s important to know how they compare before taking the next steps.  

Income-Based Repayment Plans

If you don’t qualify for Public Service Loan Forgiveness, you may also choose to pursue an income-based repayment plan. These types of plans set a monthly payment as a percentage of your income. Income-based repayment may be a good fit for entry-level engineers who are still working toward higher salaries.   Here are a few types of income-based repayment plans available to engineers:
  • Pay-as-You-Earn (PAYE): PAYE plans are based on a percentage of your adjusted gross income and family size. They are available to individuals who borrowed after 10/1/2007, or those who received eligible Direct Loan disbursements after 10/1/2011.
  • Revised Pay-As-You-Earn (REPAYE): REPAYE plans are similar to PAYE plans, but do not have date restrictions on the loans. They do take your state of residence into consideration, however.
  • Income-Based Repayment (IBR): IBR plans require you to be experiencing financial hardship. If you qualify, they are based on a percentage of your adjusted gross income and family size.
  • Income-Contingent Repayment (ICR): Many individuals who can’t qualify for PAYE or IBR plans apply for ICR. These start as a percentage of your adjusted gross income, then grow as your income grows.

State Student Loan Assistance Programs

Engineers are highly valued in the professional world. Some states and private organizations have created student loan repayment assistance programs for STEM professionals, with the goal of encouraging students to pursue these careers.   If you’re an engineer looking for student loan assistance, here are a few examples of state-driven programs you may be eligible for:
  • Harold Arnold Foundation
  • Wavemaker Fellowship
  • North Dakota DEAL Loans

Employer Student Loan Repayment Assistance Programs

Some employers provide student loan repayment assistance as a job benefit, which operates similarly to a 401(k). You designate a certain dollar amount to your student loan payments each month, and your employer matches your contribution up to a cap amount. These types of benefits can help improve employee retention rates while supplying necessary financial aid.  

Refinance Your Engineering Student Loans with ELFI

If you’re ready to refinance your engineering student loans, ELFI can help. By refinancing your engineering student loans with ELFI, you’ll enjoy benefits including:
  • No application fees 
  • No origination fees
  • No penalty for paying loans off early
  • If approved for refinancing, ELFI has a referral bonus program
  Ready to get started? Learn more about student loan refinancing with ELFI and apply today: https://www.elfi.com/student-loan-refinancing/.*  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.   *Subject to credit approval. Terms and conditions apply.
Woman struggling with student loan refinancing misconceptions
7 Common Student Loan Refinancing Misconceptions

Refinancing is kind of like leveling up. After months or even years of working hard to become debt-free, you then gain access to a higher tier of borrowing - better terms, a lower interest rate or a smaller monthly payment. Many people have misconceptions about student loan refinancing, however, which keep them from taking advantage of the benefits that student loan refinancing has to offer.   If you're new to borrowing, it's easy to get scared of changing anything about your loan repayment process - even if that means losing out on the money that refinancing can save you. Here are some of the most common student loan refinancing myths - and what you need to know instead.  

Refinancing Student Loans Takes Too Long

Don't fall prey to the misconception that student loan refinancing is a lengthy, tedious process. In fact, refinancing student loans is usually very straightforward. You fill out an application and wait a couple of days for the lender to run your credit report and verify your personal information. Once that’s been completed, you’ll be presented with the refinance offers you qualify for.   The total length of time from beginning to end should take a couple of weeks. This also depends on how quickly you respond to questions from the lender and provide any additional forms or information they request.  

Student Loan Refinancing Has Expensive Upfront Costs

Unlike mortgage refinancing, student loan refinancing has no upfront costs like application or origination fees. That’s also why there’s no downside to applying for a student loan refinancing multiple times.   Plus, most lenders don’t charge a prepayment penalty, which is a fee for repaying the loan ahead of schedule. The only fee you’ll pay is the stated interest rate. You may owe a late fee if you make a payment after the due date, but that can be avoided if you set up automatic payments.  

You Need a High Income to Refinance Student Loans

While some lenders require that borrowers have a high income to qualify for student loan refinancing, others are more lenient. All lenders, however, care about the debt-to-income (DTI) ratio, which is your monthly debt payments divided by your gross income. Most lenders want a DTI percentage below 50%.   To calculate your DTI, add up your monthly debt payments including mortgage, car loan, personal loan, credit card payment and any other loans. Include a rent payment if you don't own your property. Then, divide that total figure by your gross or pre-tax monthly income.   If your DTI is below 50%, then you’re likely a good student loan refinancing candidate. If it’s higher, then you need to increase your income, decrease your monthly housing payment or pay down some of your debts  

You Need a Perfect Credit Score to Refinance Student Loans

Another misconception about student loan refinancing is that you need an excellent credit score to qualify, but lenders often accept borrowers with credit scores as low as 660. This is great news for young borrowers who haven’t built a strong credit history yet, or who ran up some credit card debt in college.   What may hurt your chances of being approved are any recent late payments, bankruptcies, defaults, liens or recent applications for other loans or lines of credit. Before applying to refinance your student loans, check your official credit report at AnnualCreditReport.com.   About one in five people have a mistake on their credit report, which can lead to an application being denied. Look at your credit report from all three credit bureaus - Experian, Equifax and TransUnion - and make sure you recognize all the accounts.   If you notice a mistake, file a dispute directly with each of the credit bureaus. It may take a few weeks to have it removed from your credit report. Make sure to follow up and verify that it’s been deleted.   You can check your credit score for free through a bank or credit card provider, or a service like Credit Karma. If your score is 660 or higher, you can feel free to apply for student loan refinancing.   You can increase your shot of being approved by applying with a cosigner. A co-signer is someone who agrees to assume legal liability for your debt if you stop making payments and default. The loan will also show up on the cosigner’s credit report.   Even if you can be approved to refinance by yourself, you may receive lower interest rates if you apply with a cosigner.  

You Can Only Refinance Once

A common misconception is that you have only one opportunity to refinance your student loans. In reality, however, there’s no limit on how many times you can refinance. Many choose to refinance every time the Federal Reserve decreases interest rates because they can get a better deal on their student loans.   The only thing that might affect how often you can refinance is your credit score. If your credit dips below a certain threshold, then a lender may not approve your application. Also, you may be denied if you lose your job or your income drastically plummets.  

You Refinance All Your Student Loans

Many borrowers have a mix of federal and private student loans and assume they have to refinance all those loans at the same time.   But borrowers can choose to refinance the loans they want. They can keep their federal loans as they are and only refinance their private loans. If they have a private loan with a low interest rate and one with a high interest rate, they can choose to only refinance the latter.   In some cases, borrowers may have a better chance of being approved if they only refinance some of their loans instead of all of them.  

Student Loan Refinancing is a Confusing Process

When you apply to refinance with ELFI, you’ll be matched to a member of the Personal Loan Advisor team. Every time you call ELFI, you can speak to that same person. This minimizes the confusion and frustration involved with the refinancing process.   As of 10/19/2020, ELFI has a 4.9 rating on Trustpilot with more than 1,200 reviews. More than 90% of those are five-star reviews. ELFI also has an A+ rating from the Better Business Bureau.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
Man feeling overwhelmed by student loans
What to do When Your Student Loan Payment is Overwhelming   

Having student loans is not unusual. In fact, 45 million people have them. It’s also incredibly common to feel overwhelmed by your student loan payments.   A survey of student loan borrowers found that almost 65% of respondents said they lose sleep because of the stress caused by their loans. If you find yourself overwhelmed by your monthly student loan payment, there are some options you should consider to lessen the burden.   Before you can explore alternatives, however, you need to know the types of loans you have. Certain options are only available for federal loans as opposed to private loans. Check the Federal Student Aid website to determine any federal loans you may have, and request your free credit report to see any private loans. Once you’re familiar with your loans, you can consider new courses of action.  

Create a Budget

If you don’t already have a budget, create one! This will allow you to see if you can afford your current student loan payment. It will also show you areas where you’re spending unnecessarily. If you find there just isn’t enough income to cover all your necessary expenses, then you can begin working on different ways to reduce your student loan payment.  

Research Different Payment Plans

If your federal student loan payment is overwhelming, consider switching to a different payment plan. When you initially begin repayment, your loans are automatically put on the standard repayment plan. On this plan, your payments are based on a ten-year repayment term.   A Direct Consolidation Loan can help you change your payment plan to help make your payment more affordable. It can also help consolidate multiple federal loans into one loan. (Note: Consolidating your federal loans is different from student loan refinancing, discussed below.)   This will help you qualify for certain longer repayment plans, resulting in a lower monthly payment. One of the drawbacks of extending your payment term is you will end up paying more in interest costs over time.  

Income-Driven Student Loan Repayment

Certain loans are eligible for income-driven repayment plans. They can help make your payments more affordable and are based on your income and family size.  

Graduated Student Loan Repayment

If an income-driven repayment plan does not work for you, you can change to a graduated repayment plan. Your payment will begin low and increase over time for a ten-year term.  

Extended Student Loan Repayment

Another option is an extended repayment plan. To qualify, you must have certain loans over at least $30,000. Your payment may be fixed or may increase over time for a 25-year term.  

Look Into Refinancing

If you have overwhelming private or federal student loan payments, consider student loan refinancing. Refinancing may lower your interest rate and reduce your monthly payment. This is a good option even if your current payment fits your budget.   Refinancing can help lower your monthly payment, and can also save you thousands of dollars in interest over the life of the loan. Refinancing means obtaining a private loan to pay off your existing student loan or multiple loans.   Student loan refinancing differs from consolidation, which is only for federal student loans and may not necessarily reduce your interest rate. You can refinance private or federal loans, or both, and can also change your student loan repayment term to better fit your needs.   Here is an example of how refinancing can save you money:   If you have $65,000 of student loans with a 6% interest rate and have 10 years remaining on your loans, you will pay approximately $722 per month. If you refinance and qualify for a lower interest of 3.61%, your monthly payment would be reduced to approximately $646 per month. This equals savings $76 per month in savings. You will also save more than $9,000 in interest over the life of the loan.   To see how much you could save, try ELFI’s Student Loan Refinance Calculator.*  

Increase Your Income

Of course, increasing your income is easier said than done. If your student loans payments are becoming overwhelming, however, it may be a necessary step. Increasing your income through overtime hours or a side hustle can make your payments more manageable. A side hustle can be as easy as babysitting or dog walking, or more involved like starting a side business based on a passion.   If you haven’t begun repayment on your loans, but know you will face a significant loan payment after graduation, consider these steps:  

Build a Budget Early

Start a budget before repayment begins that includes your future student loan payment. This will allow you to see if you will be able to comfortably afford your payment. It will also help you build an emergency fund and a strong financial foundation.  

Seek Employer Student Loan Benefits

Look for an employer that offers student loan assistance. The number of companies that are offering student loan benefits is increasing, although the benefit is still rare. Some offer monthly benefits that can help you pay your loans off faster. Others offer a yearly benefit amount for a certain number of years. Either way, extra money from an employer to help pay loans will help you reduce your loan amount faster.  

Work Toward Public Service Loan Forgiveness

Apply for employment that may qualify for forgiveness. If you have federal loans, certain employment can qualify for forgiveness under the Public Service Loan Forgiveness program. Certain loans and types of employment are required so be sure to pay close attention to the requirements.  

Bottom Line

If you have an overwhelming student loan payment, explore your options to reduce your payment while furthering your debt-free journey.  
  *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.