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Knowledge Hub / How Soon Can You Refinance a Student Loan?
How Soon Can You Refinance a Student Loan?

How Soon Can You Refinance a Student Loan?

Living with Student Loans
ELFI | May 22, 2023
How Soon Can You Refinance a Student Loan?

Depending on the type of student loans you have and when you took them out, your loans could have high-interest rates — some loans can have rates in the double digits. Student loan refinancing can help you save significant money, but how soon can you refinance a student loan?  Although there are some lenders that allow you to refinance while you’re still in school, the earliest you can refinance with the majority of lenders is after graduation. Researching your options and refinancing soon after earning your degree can help you manage your debt more effectively. 

Factors That Influence When You Should Refinance A Student Loan

How soon can you refinance a student loan? The timing is dependent on the following factors: 

Do You Meet The Eligibility Criteria?

Student loan refinancing eligibility requirements vary by lender, but borrowers generally must meet the following criteria before they can refinance their debt

Your Co-Signer Requirements

Although a co-signer isn’t required to refinance student loans, adding a co-signer to your application can be helpful. A co-signer can improve your chances of qualifying for a loan if you don’t meet a lender’s income or credit criteria. And adding a co-signer can allow you to secure a lower rate than you’d get on your own.  Not all lenders allow co-signed loans, so if you have a limited credit history or aren’t working full-time, check to see if your selected lender permits co-signers. 

Current Interest Rate and Payment Terms

If you’re trying to decide when to refinance your loans, paying attention to current interest rates can help you make a decision. Comparing current rates to the rates on your existing loans can allow you to calculate your potential savings.  For example, let’s say you took out a private student loan to pay for school. You borrowed $30,000, and the loan has a 10-year term and an annual percentage rate (APR) of 8.00%.  If you refinance your debt, you could qualify for a 10-year loan at 6.5% APR. By refinancing your loans, your monthly payment would decrease by $23, and you’d save over $2,800 in interest. 

Original LoanRefinanced Loan
Loan Term10 Years10 Years
APR8.00%6.5%
Monthly Payment$363.98$340.64
Total Interest$13,678$10,877
Total Repayment Amount$43,678$40,877

You can use the student loan refinancing calculator to see how much you can save by refinancing your loans with today’s rates. 

Life Circumstances

Changes in your life can also affect your ability to refinance your loan and qualify for a better rate. For example, the following scenarios can improve your odds of refinancing to a loan with more favorable terms:

Refinancing Private vs. Federal Student Loans

There are two main types of student loans: federal and private. The difference between private and federal loans is the lender; private loans are issued by banks, credit unions, and financial institutions, while the U.S. Department of Education issues federal loans.  Federal loans are eligible for more borrower protections and benefits, such as loan forgiveness and alternative payment plans. Because refinancing federal loans transfers them to private lenders, you’ll lose access to those protections when you refinance, so you should think twice about refinancing federal debt.  Private loans aren’t eligible for federal loan benefits, so there are very few drawbacks to refinancing private loans with another lender. Refinancing could allow you to save money over the life of your loan or dramatically reduce your monthly payments. 

Refinancing Your Student Loans With ELFI

How soon can you refinance a student loan? In most cases, you have to wait until after graduation to refinance your debt, but waiting until you earn a degree and get a full-time job offer can improve your odds of qualifying for a loan with better rates and terms.  When comparing your loan options, keep in mind that there are many benefits to refinancing your student loans with ELFI.*

Learn more: Refinance your student loans in six easy steps