6 Questions to Ask Before Refinancing Your Student Loans

By Trish Sammer Updated on May 6, 2019

You’re probably grateful that student loans helped fund your education—but now you’d be even more grateful if that debt would loosen its grip on your finances.

One way to instantly change your financial outlook in terms of student loans is to refinance. In fact, many people reduce their monthly payments by over $200 a month, and save close to $20,000 over the life of their loans.

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But refinancing isn’t right for everyone. Ask yourself these six questions before you decide if it would benefit you:

1. What loans do I have?

Many people have multiple student loans from more than one lender—and it’s not unusual for people to be uncertain about who their lenders are.

Before you think about refinancing, gather all your private and federal loan information so you can see what you have.  

If you don’t have all your info at your fingertips, don’t panic.

To research or double-check your federal loans, start by going to the National Student Loan Data System (NSLDS). The site will walk you through the steps needed to find your federal student loan information.

An easy way to double-check your private loan obligations is to request a free copy of your credit report at AnnualCreditReport.com.

You can also call your college’s financial aid office and ask how to obtain a breakdown.

2. What are my loan amounts, terms and interest rates?

Once you have the list of your specific loans, write down the interest rates for each. If you’re paying less than 4% interest, or you’re close to paying off your loan, refinancing may not be worth your while.

As you explore refinancing, consider changing the repayment terms of your loans, too. If your loan amount is low, you may want to shorten the repayment term so you save on interest.

If it’s high, extending the repayment terms might make it easier for you to repay.

3. What are the fees?

The good news is that many lenders offer no-fee student loan refinancing. There's no reason to pay additional origination fees to refinances your student loan debt. 

See our picks for the best no-fee student loan refinancing offers.

Imagine Life Without a Student Loan Payment... Start Saving Now!

4. Will I lose benefits?

It’s important to understand that if you refinance federal loans, you’ll lose repayment options based on income, and you’ll become ineligible for any loan forgiveness programs you were planning to take advantage of.

Carefully consider whether lower interest rates are worth the trade-off for your circumstances.

5. How much will I save?

Obviously, one of the most important considerations in refinancing is how much you might save.

Use our Student Loan Refinancing Calculator to get a fast and easy in-depth assessment of your potential savings.

6. Is this the right time for me to refinance?

Remember that once you refinance, you can’t ask to return to your former agreement. So, for example, if you decide to forego the benefits you may gain from a federal student loan and proceed with refinancing, you’re stuck with that decision.

You should also consider your current financial picture. Creditors set various minimum requirements for refinanced student loans. Many want to see you have a solid credit score (over 650), a stable income, and a reasonable debt-to-income ratio. If that’s not you, you might want to wait until you’re on better financial footing. If you can’t wait, consider applying with a cosigner.

Use our 10-second ReFi Ready tool to find out how much you could save by refinancing.

Published in: Refinance

About the Author
Trish Sammer

Trish Sammer is Nitro's managing editor. Her work has appeared in Woman’s Day, Redbook, Huffington Post, TechCrunch, and Forbes. She has also written for various corporate clients, including the tech giant SAP, The Franklin Institute, and PSE&G. When Trish isn’t busy acting as a writing ninja for other people, you can find her … well, writing about other stuff, like divorce and blended family life. She lives outside of Philadelphia with her husband, their combined brood, and the world’s laziest dog. Read more by Trish Sammer