Refinancing student loans offers a long list of benefits. It allows you to change your loan payments to suit your current circumstances. And if get a lower interest rate, you’d save a lot over the term of the loan. In spite of its many benefits, refinancing is not the best option for all student loan borrowers. Here’s how to determine if you should refinance your student loans.

When To Refinance Your Student Loan

These are some scenarios where you should consider refinancing your student loans:

Your Credit Score Has Improved

When you refinance, lenders will offer you interest rates based on your credit score. The higher your score, the more likely you are to qualify for the lowest interest rate possible. The smallest drop in your interest rate can add up to significant savings over the loan term.

Has your credit score has improved since you applied for the original loan? It may be time to check what interest rate you qualify for if you decide to refinance your student loans.

Market Interest Rates Are Low

Market interest rates fluctuate depending on various factors. Right now, rates are the lowest they’ve been in several years. If you refinance now, you can score those low rates regardless of your credit score. These low rates get locked in for the life of your loan. This could save you thousands of dollars over the loan term.

And if your score is good, you’ll enjoy even lower interest rates and higher savings.

You Want to Switch From Variable Rate To Fixed Rate

With variable rate loans, the interest rate fluctuates depending on market conditions. When rates are high, your monthly payment increases too. This can mess up your budget. If there’s a huge spike in rates, the monthly payments may become unaffordable. This increases the risk of defaulting on the payments.

Switching over to a fixed rate makes your payments more predictable. And if you refinance when rates are low, you can lock in that low rate for the rest of the loan term. The money saving potential is an added bonus.

You Want to Simplify Your Loan Repayments

Managing multiple loan payments can get overwhelming. You have to keep track of many due dates and payment amounts every month. Not only is this stressful, it also increases the odds of missing a payment.

Refinances simplifies your payments by combining all your loans into one new loan. This way, you’ll have to keep track of only one payment every month. It is also easier to set up autopay for the one loan so you never have to worry about due dates or being late again.

You Want to Pay Off Your Student Loans Sooner

If you have disposable income every month, you can increase your monthly payments. This will reduce the repayment term so you are debt-free much sooner. You’ll pay less accrued interest over the shorter term so you’ll save money too. You’ll rack up those savings if you qualify for a lower interest rate.

You Need to Lower Your Monthly Payments

Salaries tend to be on the lower side when you’re just getting started in your career. If you’re having trouble making ends meet, you can lower your monthly payments when you refinance. This will make the payments more affordable.

The downside is the lower monthly payments will extend your loan term by a few years. With this option, you’ll take longer to clear your debt. You’ll also end up paying more in accrued interest over the longer loan term.

You’re Unhappy with Your Current Loan Servicer Or Lender

Managing loans can be stressful. An unhelpful loan servicer or lender only adds to that stress. You don’t have to stick with a lender who won’t help you when you need it. Refinancing allows you to change lenders for a more pleasant experience.

You Have Private Student Loans

Private student loans don’t have inbuilt protections or benefits like federal loans do. As long as you’re getting a better rate, it makes sense to go ahead and refinance.  You don’t have to worry about losing any benefits.

It’s a little different with federal student loans. The federal government doesn’t offer refinancing. When you refinance federal student loans, they get converted to private loans. As private loans, they lose all benefits associated with the original loan.

To Recap: It makes sense to refinance your student loans if you can snag a better deal. This may be lower interest rates or terms that are more suitable to your current circumstances.

When NOT To Refinance Your Student Loan

Refinancing is not always the right option for all student loan borrowers. These are some scenarios where you should not consider refinancing your student loans:

You Can’t Get A Lower Interest Rate

The main goal for refinancing is to save money with a lower interest rate. Your interest rate will depend market interest rates and your credit score.

If your credit score is bad, you won’t qualify for lower interest rates. In this case, it doesn’t make sense to refinance. High market rates will also prevent you from getting the lowest rate possible. It may be better to hold on to your current loans until rates drop. The higher interest rate defeats the purpose of refinancing.

You Have Federal Loans & See a Drop In Income

Federal student loans offer a few compelling benefits and protections. You have access to income-based repayment plans, which can help if your income drops. You also have access to deferment and forbearance in case of any financial hardship. The Public Service Loan Forgiveness program forgives part of the loan for qualifying borrowers. These protections act like lifelines when you run into financial

You’ve Defaulted On Your Loans Or Declared Bankruptcy

Most lenders will only refinance loans are in good standing. You won’t qualify if you’ve defaulted on your loans or you’ve recently declared bankruptcy. You’ll have to get your student loans back on track before considering refinancing.

You’re Almost At The End Of Your Loan Term

The minimum loan term lenders offer for refinancing is five years. If you have less than five years left on your loan term, it’s not worth refinancing. Refinancing at this stage will only extend your loan term. You’ll end up paying more in interest over the longer term. This defeats the purpose of refinancing.

Are You Ready to Refinance Your Student Loan? What To Do Next

If you’ve decided that refinancing is the right option for you, here’s what you need to do next.

Research lenders and compare eligibility requirements, interest rates, and loan terms. You don’t have to scour the internet searching for lenders. At you’ll find a list of the top eight companies for student loan refinance. You’ll find a highlight of what each company offers features and interest rates.

You can even compare rate offers and apply for refinancing from that page itself. Go to today to get the best rates when you refinance your student loan.