How to Refinance Student Loans and When Not To

Learn when student loan refinancing saves money and when it costs you federal protections and benefits.

1. Check your current loan details. Log into your federal loan servicer and write down each loan's interest rate, balance, and loan type. Federal loans typically range from 4-7% as of 2026. Private loans often carry higher rates, especially if you took them out with limited credit history.
2. Get rate quotes from multiple refinancing lenders. Most lenders offer rate checks without affecting your credit score. You'll need stable income and good credit (typically 650+ credit score) to qualify for the best rates. Refinancing rates for qualified borrowers often range from 3-6% as of 2026.
3. Calculate your total interest savings. Use a loan calculator to compare your current payment timeline against the refinanced terms. A 2-point rate drop on $50,000 in loans can save $5,000-15,000 over 10 years, depending on your repayment term.
4. Evaluate what you'll lose with federal loans. Federal loans offer income-driven repayment, Public Service Loan Forgiveness, and pandemic-style payment pauses. If you work in public service, have unstable income, or might struggle with payments, these protections often outweigh rate savings.
5. Choose your new loan terms carefully. Shorter terms (5-10 years) mean higher monthly payments but less total interest. Longer terms (15-20 years) reduce monthly payments but increase total cost. Most borrowers should avoid extending their payoff timeline beyond their original federal loan term.
6. Complete the refinancing process. Submit your application with income documentation and choose a co-signer if needed for better rates. The new lender pays off your old loans directly. This process typically takes 2-6 weeks, during which you should continue making payments to your current servicer.