Both federal and private student loans can be refinanced, as long as you meet the credit and income requirements established by the lender. That being said, there are some pros and cons on each front to determine whether refinancing is the right move for you. Here’s what to know.

Types of student loans you can refinance

You can refinance both federal and private student loans, as long as you meet the lender’s requirements. Although these vary from one lender to the next, there are two basic things you’ll need to have to be approved for the loan:

  • A good credit score (680+).
  • A stable source of income.

Your credit score will also be a key factor in determining terms and interest rates that will be offered to you, so the higher the better. If you don’t have a long credit history or have a less-than-stellar credit score, but are good in the job department, there are some things you can do to improve your chances of getting the best terms and interest rates.

First, you can apply for the loan using a co-signer. When you apply for a loan using a co-signer, the lender will take that person’s credit score and financials into account to approve you for the loan.

A co-signer can be any consenting adult — your parents, spouse, partner, a family friend, etc. — that is willing to lend you their creditworthiness. However, by using a co-signer, that person will become responsible for your debt should you default on your payments, so that’s something to keep in mind before you ask anyone to sign on your loan.

If you don’t feel comfortable asking someone to apply for the loan with you, then your other option is to wait and work on your credit score. This is especially true if you just graduated college and don’t have a long credit history to vouch for you. Still, that doesn’t mean you’ll have to wait years before refinancing your loans. Making timely payments on your debts, reporting things like your rent and utilities, in addition to taking out a secured credit card can all boost your credit in a matter of months.

When can you refinance your student loans?

Your student loans must be in repayment for you to refinance them. For that reason, most lenders don’t allow you to refinance your loans until six months after you graduate, which is when the grace period is typically over.

How many times can you refinance student loans?

There is no limit on how many times you can refinance your student loans. The only factor that matters is whether or not you meet the lender’s eligibility requirements. Additionally, you’ll have to wait at least a month before refinancing again.

“A lot of people think, ‘If I refinanced once, why do I need to do it again?,’” Steven Muszynski, student loan expert and CEO of Splash Financial, says. “Say you refinanced four years ago, and you went from 8 percent to 6 percent APR — that’s great. But if you could go from 6 percent to 5 percent or lower today – then you could save thousands of dollars more, depending on your loan balance and term,” he adds.

Should you refinance your student loans?

When you refinance your student loans, you’re essentially replacing your old loans for a new one. This new loan will have different terms and interest rates — both of which can make your debt more manageable by allowing you to save money on interest, speeding up repayment or by lowering your monthly bill. But despite these perks, refinancing isn’t the right option for everyone.

Refinancing your student loans may be a good idea if:

  • You have private student loans. Private student loans tend to have higher interest rates than federal loans. Private lenders also don’t offer income-driven repayment options or forgiveness programs. If you qualify for a better term, interest rate – or both – then refinancing your private loans is definitely a good idea, as you could potentially save thousands of dollars down the road.
  • You don’t qualify for federal student loan forgiveness programs. If you have federal student loans and don’t qualify for the Public Service Loan Forgiveness (PSLF) program or Biden’s one-time student loan cancellation, then refinancing may be a good choice.
  • Your income and credit score has improved since you took out your student loans. If both your credit and salary have substantially improved since you took out your loans, it’s possible that you can secure better terms and interest rates than what you currently have.
  • You have variable rate loans. If you have private student loans with a variable interest rate, chances are your rates — as well as your payment — will continue to increase, especially now, with the current inflationary environment. Refinancing your loans can protect you against this, as you could lock in a fixed rate, which remains unchanged over the life of your loan.

Refinancing may not be a good idea if:

  • You only have federal student loans. If you have federal student loans, refinancing your loans would automatically turn them into private ones. That means you’d lose access to income-driven repayment plans, forgiveness programs and other protections, which is not advisable.
  • You have a credit score below 680. If your credit score isn’t in good shape, it’s best to wait to refinance your loans, as you won’t be able to secure the best terms and interest rates and could be hurting your credit score even more by applying.
  • You have less than five years left on your student loans. Most private lenders offer student loan repayment terms spanning between five and 20 years. If you have less than five years left on your loan, refinancing may not make much sense, as you’d be extending your repayment period and paying more on interest — even if your payment does go down.
  • You won’t save money. The point of refinancing is to save money either on interest or on your monthly bill. If neither of this is true for you, then it’s best to leave things as they are. If you aren’t sure whether you’ll save money, you can use a student loan refinance calculator to help you figure this out.

The bottom line

When it comes to refinancing, both federal and private student loans are fair game. But whether or not it is in your best interest to refinance will depend on your particular situation and what your long-term goals are.