How Often You Should Refinance Your Student Loans

Grace Lemire
Grace Lemire

Grace Lemire is a freelance writer and editor with over five years of experience in the personal finance industry. She has been featured on a variety of publications, including NPR, CNN, FinanceBuzz, Dollar Geek, Pangea, and True Finance. Her work focuses on the intersection of personal finance and technology. In 2023, Grace was nominated for the Best Personal Finance Advice award in’s FinTok Awards.

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November 9, 2022

If you’ve already refinanced your student debt once, you know just how much it can save you. For example, borrowers that use Sparrow to refinance save, on average, $17,000 over the life of their loan.

With that in mind, you may be curious if you can refinance more than once. And if so, how many times can you do it? Here’s what you need to know.

Can You Refinance Student Loans Twice?

You can refinance your student loan debt as many times as you’d like. While common to do it once, you may be able to save even more by refinancing again.

For example, let’s say you started with a $30,000 student loan balance at a 6.8% interest rate with a 10-year repayment term. You refinance when you’re fresh out of college to a loan with the same balance and repayment term, but a 4.25% interest rate instead. Your new loan will save you $38 per month, or around $4,551 over the life of the loan.

Now, let’s say you opted to refinance again one year into paying off that loan. Your balance is now $26,029.05, and there are 9 years left in your repayment term. You refinance to a new loan with a 3.5% interest rate and a 5-year repayment term. While your monthly payment would increase, you would save another $2,958 over the life of your loan.

Initial Loan1st Refinance, immediately after college2nd Refinance, 1 year after making payments on the first refinance loan
Starting Balance$30,000$30,000$26,029.05
Interest Rate6.8%4.25%3.5%
Repayment Term10 years10 years5 years
Monthly Payment$345$307$474
Total Paid Over the Life of the Loan$41,429$36,878$28,411

By the time you refinance a second time, you will have already paid $3,684 toward your loan ($307 monthly payment x 12 months). However, including that amount, you will only pay $32,095 total after refinancing twice. Compared with your initial loan terms, you will save $9,334 over the life of the loan.

When to Consider Refinancing Multiple Times

While refinancing more than once can make for considerable savings, it’s important to consider a variety of factors before doing so. Here are a few instances in which it does make sense to refinance multiple times:

  1. If the savings will be significant. Refinancing is intended to make repaying your debt more manageable or less expensive. If you can save a decent chunk of cash by refinancing again, it likely makes sense to do so. However, consider whether the savings is worth going through the refinancing process again.
  2. If your credit score has increased. If your credit score has improved since the last time you refinanced, you will likely qualify for better terms or a more attractive interest rate. If it has not, however, it may be challenging to qualify for a better offer than what you currently have.
  3. If the origination fees are either low or nonexistent. While the majority of student loan lenders don’t have origination fees, some do. If the origination fee is so high that it equals, or outweighs, what you will save by refinancing, it may not make sense to do so. However, if the origination fees are low, or if there is no origination fee at all, refinancing again will likely save you money.
  4. If you want to release a cosigner. If your current loan has a cosigner, and does not allow for cosigner release, you may want to refinance again to release them from their cosigner obligations.

Is It a Bad Idea to Refinance Multiple Times?

Refinancing your student loans multiple times isn’t a bad idea if you are in fact receiving a better interest rate or terms.

Submitting a formal loan application will result in a hard credit check, however, which will temporarily hurt your credit score. If your credit score isn’t in a good place, refinancing again may not be in your best interest.

How Long Do You Have to Wait to Refinance Again?

Legally, there is no limit to the number of times you can refinance within a certain period of time. So, theoretically, you could refinance a million times if you wanted to.

However, most refinance lenders cap the number of times you can refinance with them. For example, some may limit you to one refinance per month or per quarter.

What to Consider Before Refinancing Your Student Loans

Before refinancing your student loans, consider the following:

  1. The type of loan you have. If you have federal student loans, be sure to weigh the pros and cons of refinancing them prior to doing so. If you do, you will lose access to all federal loan benefits such as income-driven repayment plans and federal loan forgiveness. 
  2. Your interest rate. While you can score a lower interest rate by refinancing, you may have already hit the lowest possible rate you can get. To see if it’s even possible to qualify for a lower rate, complete the Sparrow application. This will allow you to compare prequalified rates side-by-side, giving you insight into what you may qualify for.
  3. Think about your current financial situation. Refinancing to a shorter repayment term will likely cause your monthly payment to increase. Make sure you’re able to afford that payment prior to refinancing again.
  4. The credit impact. Submitting a formal loan application will result in a hard credit inquiry, which will temporarily hurt your credit score. While your credit score will recover from the hit over time, it’s important to make sure refinancing makes sense before clicking “submit” on a formal loan application. Minimize the number of applications you submit, or do so within the recommended FICO and VantageScore timeframes so the inquiries are recognized as rate-shopping.
  5. The overall economy. Interest rates are impacted by macroeconomic factors, such as the market. If the market is in good shape, you may qualify for a better interest rate. If the market is not, however, it may be better to postpone refinancing until it is.
  6. If your loan is within a grace period or forbearance. Refinancing while your student loan is within a grace period or a forbearance, such as the federal forbearance, will cause loan payments to begin. If your loan is within either of these periods, it’s best to hold off on refinancing.

FAQ About Student Loan Refinancing

How soon is too soon to refinance a student loan?

You can refinance your student debt as early as you’d like. There is no specific timeframe in which refinancing is considered “too early.”

How often is too often to refinance student loans?

You can refinance your student loans as often as you’d like. However, you may reach a point in which you can no longer qualify for a better interest rate or terms, simply because you’ve already landed the most advantageous option available.

Does refinancing your student loans hurt your credit?

Refinancing your student loans will cause a hard credit inquiry which will temporarily impact your credit score.

Final Thoughts from the Nest

Refinancing your student loans more than once can save you some serious cash over time. Before deciding if it’s right for you, see what you prequalify for with Sparrow. Then, compare your current loan with your new loan offers to see how much you can save.

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