Refinancing1 your student loan(s) can be a smart financial move, but it’s important to consider when the right time is for you. Below are some things to consider when deciding whether refinancing would make sense for you:
- Lower Interest Rates: If you can secure a lower interest rate than what you’re currently paying, refinancing can save you money over the life of the loan2.
- Improved Credit Scores: If your credit score has improved since you took out your loans, you may qualify for better rates and terms.
- Stable Income: If you’ve secured a stable job with a reliable income, you may be in a better position to manage a refinanced loan.
- Change in Financial Situation: If your financial situation has changed (such as increased income or reduced expenses), you may find refinancing beneficial.
- Consolidation of Loans: If you have multiple loans with different interest rates, refinancing can help you consolidate them into one loan with a single payment and potentially a lower rate.
- Shortening Loan Term: If you want to pay off your loans faster and can handle higher monthly payments, refinancing to a shorter loan term could save you on interest.
- No Interest Accruing: If you have loans that are not currently accruing interest, then you would save money by waiting to refinance them until interest begins to accrue.
- Market Trends: Monitoring interest rate trends can help you decide when to refinance. If rates are expected to rise, it may be a good time to lock in a lower rate.
It’s important to note that refinancing federal student loans with a private lender like Earnest will result in a loss of federal benefits. Prior to applying, we recommend reviewing our Eligibility Guide & Requirements.
1 Please note that you will lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan.
2 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.