Part of healthy finances is staying on top of payments–or better yet, ahead of them. Refinancing student loans is a way to manage your payments by adjusting for a lower interest rate or altering monthly amounts. If done right, refinancing student loans can save you money and enhance your credit.

That said, can you refinance student loans while still in school? Let’s break down the answer here.

Will Lenders Let You Refinance?

Most lenders won’t let you refinance student loans while still in school. Having a Bachelor’s degree is one of the requirements you’ll need to meet to qualify for refinancing. Without proof that you’ve graduated from college, you may find it difficult to refinance your student loans. Additionally, some lenders will only approve applicants who have graduated from colleges that are authorized to receive federal aid.

There are very few lenders who will allow you to refinance while still in school. Even then, you may need to be only a few months away from graduation to qualify. Others may allow you to refinance only if you apply with a creditworthy cosigner.

Is It Worth Refinancing While Still In School?

It depends. There are pros and cons to refinancing while still in school.

Generally, refinancing is a great way to change the terms of your loan to suit your financial circumstances. It is especially beneficial if you have good credit. A high credit score will qualify you for a lower interest rate. This will save you thousands of dollars in interest costs over the life of the loan. However, it’s very rare for students to have built their credit score sufficiently to meet this requirement. With a less than stellar score, you won’t get the rate advantage.

On the downside, if you do get approved with or without a cosigner, your repayments will start immediately. Usually, student loans have a grace period before repayment starts. Your monthly payments kick in about six months from your graduation date. If you refinance while still in school, your payments start within one month from the date the money is disbursed. That means you need to have some source of steady income to afford the monthly payments. A delayed or missed payment can hurt your credit score and also attract a fine.

Why You May Not Want To Refinance Federal Student Loans

If you have federal student loans, you may want to hold off on refinancing till after you’ve graduated. These loans come with various flexible repayment options and forgiveness options. It is also easier to get deferment and forbearance on these loans than on private loans. You will lose out on all of these benefits when you refinance federal student loans.

You should not refinance federal student loans until you have considered these two scenarios:

#1 – Are you planning on working in the public sector or as a teacher in an underserved area? Both of these may qualify you for having your federal student loans forgiven if you meet certain requirements. If you’re planning on pursuing forgiveness, it may be better to hold on to your federal student loans.

#2 – Do you think you may want to try an income-driven repayment plan after you graduate? These plans allow you to peg your payments to your income, which can be particularly useful in lower-paying professions. An income-driven plan may increase the cost of the loan but it is far better than defaulting because you can’t afford the monthly payments.

Private student loans do not offer any special benefits or protections. It makes sense to refinance these loans as soon as you qualify for a lower interest rate. Even a marginal drop in interest could save you hundreds of dollars over the loan term.