Refinancing after repayment restart: when it makes sense

By Corey Buhay | Published on October 21, 2025

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After a nearly four-year pandemic payment pause, student loan bills are once again showing up in inboxes across the U.S.—and this time, payments are mandatory.

While private borrowers weren’t affected by the pause, federal borrowers didn’t have to make any payments at all from mid-2020 to late 2023. During the subsequent student loan on-ramp period, many federal borrowers chose to continue putting their payments off, even though interest had begun to accrue again. After all, during that period, missed payments couldn’t be penalized with negative credit reporting or default. Many folks felt like there was no real rush.

So, when the on-ramp period ended and those consequences kicked back in on September 30, 2024, many federal borrowers found themselves making payments for the first time since 2020—and struggling to keep up.

If you’ve opened your first bill in years and felt a wave of financial stress, you’re not alone. Many federal student loan borrowers have recently rediscovered just how high their interest rates and monthly payments are. While refinancing is one way to get some relief, it might not make sense for everyone. Here’s how to decide whether to refinance student loans after the payment restart.

When refinancing makes sense

If you’ve just resumed loan repayment for the first time in five years, you might be suffering from sticker shock. It’s a common reaction, and completely understandable to look for ways to reduce your monthly bill. However, if you’re in this situation, that probably also means the bulk of your student loans are federal.

While private lenders will happily refinance federal student loans, it’s best to think carefully before you do so. That’s because federal loans come with all sorts of government-backed protections, including access to forbearance and deferment programs, income-driven payment plans*, and options for student loan forgiveness. If you refinance your federal debt, it will turn into private debt, and you’ll forfeit all those protections. Once this is done, it can’t be reversed.

*As a result of ongoing court actions, the terms of some Income-Driven Repayment (IDR) plans, including the SAVE plan, may be subject to change. Please refer to studentaid.gov for the current status of these plans.

However, if you don’t expect to take advantage of federal borrower protections (and don’t qualify for student loan forgiveness), refinancing could be worth it for you. That’s especially true if you have federal student loans with extremely high interest rates. In this case, refinancing could help you get a lower rate—something the federal government doesn’t offer. Combined with a shorter loan term, a lower rate could help you get out of debt much faster.

Refinancing is also a good option if you have private loans. It also helps to have good credit. The better your credit score, the better refinance offers you’ll qualify for. That translates to more savings over time.

To summarize, refinancing might make sense for you if:

• Your federal loans don’t qualify for student loan forgiveness and you don’t plan to use benefits like IDR or deferments
• You have private student loans
• You want to release a cosigner on an existing private student loan
• You’re currently paying a high interest rate
• You’ve built up good credit (or have a creditworthy cosigner who has)
• You want to reduce your monthly payment and/or extend your loan term
• You want to change your loan service.
• You’re looking to save money in interest over the life of the loan

When refinancing might not be the best idea

Refinancing doesn’t make sense for everyone. If you have federal loans and you think you might qualify for Public Service Loan Forgiveness (PSLF) or another government forgiveness program, you’ll likely save more money by going that route than by refinancing. Likewise, if you imagine you’ll one day need to apply for deferment, forbearance, or an income-driven repayment program for your federal student loans, refinancing may not be your best bet.

It also might not make sense to refinance if:

• You have a poor credit score and can’t qualify for a lower rate
• You like your current loan terms and loan servicer
• You’re close to paying off your loan, and the savings from a lower rate wouldn’t outweigh the cost of refinancing

How to refinance your student loans

You can refinance with a bank, credit union, or online company. While a bank or credit union can be an easy choice if you already have a financial institution you like working with, online lenders can sometimes be more affordable since they have less overhead than brick-and-mortar establishments. Here’s how to find a refinance lender and get started.

Shop around

Start with a little research. Pick a few lenders that seem like a good fit, and jot down the details so you can compare your options side by side—it doesn’t have to be fancy, even a quick notes app list will do the trick. Be sure to write down these details for each lender:

• The annual percentage rate (APR) they can offer you
• The loan terms they offer
• Whether they offer variable or fixed interest rates
• Any discount offers or other perks
• Whether the offer deferment or other hardship protections
• Whether they’ll allow you to refinance with a cosigner
• Their customer service rankings and reputation

Get prequalified

If you can, get prequalified with a few top-choice lenders. You’ll have to provide some basic personal information and undergo a soft credit check, which won’t affect your credit score. In exchange, the lender will provide you with a custom rate estimate. That will give you a better idea of the actual rates they can offer you.

Fill out an application

When you narrow your lender list to a single favorite, fill out an official refinance application. Try not to do this for more than one lender; submitting an official application typically triggers a “hard credit check,” which can negatively impact your credit score. The lender will then review your application, which typically takes around one business day.

Review your loan offer

If the lender approves your application and makes you an offer, carefully review the terms and conditions before you sign. If you don’t like the lender’s final terms, you don’t have to accept them. Feel free to decline and apply with another lender instead.

Continue making payments until payoff is complete

Once you’ve accepted a refinance loan offer, your new lender will begin paying off your existing loans. Typically, this payoff process takes ten days. Keep making your payments on those existing loans until you get a letter saying that the old accounts are officially paid off and closed out. At this point, you’ll begin making payments on your new, refinanced loan.

See what refinance rates you could qualify for

Now that federal payments have resumed, many borrowers are considering student loan refinancing in 2025. While it’s not the best choice for everyone, refinancing at the right time could help you lower your monthly payment and potentially secure a better interest rate. If you qualify for a lower rate, you could save hundreds if not thousands of dollars over the life of your loan.