The Right Time to Refinance Student Loans

By Sasha Bulatskaya | Published on October 21, 2025

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When looking for the best time to refinance your student loans, the general rule is it’s better to do it soon, but that’s not always the case.

Most financial experts will say that you should refinance your student loans as soon as possible to lower your interest rates and potentially pay off your loans faster. However, it’s not that simple for many borrowers.

Refinancing comes with significant benefits. For example, if you have $40,000 in student loans with an 8.94% fixed interest rate and a five-year term, your monthly payment will be $829 and you’ll pay almost $10,000 in interest over the life of your loan. But, if you were to take that same loan amount and refinance for a 5.72% fixed interest rate, you’d pay $768 per month and a little over $6,000 in interest. *Refinance example listed above is for illustrative purposes only and may not be representative of rates or terms offered by Earnest. Savings are not guaranteed and may vary.

What to consider before refinancing

Before choosing to refinance, you will want to review some of the most significant factors impacting your rate and approval.

Your interest rates vs. market interest rates

Compare current market rates with the interest rates on your student loans. If the current rates are lower than your loan rates, it’s a sign that refinancing may be worth it.

Whether you have federal or private student loans

Consider whether you have federal student loans, private student loans, or both. Federal student loans come with federal protections, and you will lose all federal benefits, including access to income-driven repayment plans and forgiveness if you refinance. Some people still choose to refinance their federal loans because, for them, the benefits outweigh the risks.

Refinancing private student loans is considered less risky because you’re switching from one private lender to another (ideally, at a lower interest rate), but it’s not for everyone.

Your eligibility

Your credit score plays a big role in approval and getting the lowest interest rate, but it’s not the only thing lenders take into account. Different lenders will have different eligibility and credit requirements. We recommend visiting each lender’s eligibility page for more information. To view Earnest’s, visit our eligibility page.

Your financial situation

Look at how much money you have coming in every month. Many lenders want to see that you have some savings to cover your expenses if you lose your job. Although you don’t need a traditional nine-to-five to get approved, showing that you have an income stream is essential.

Many lenders also rely on your debt-to-income ratio, or DTI, to approve your loan or give you a better rate. You can use our Debt to Income Ratio calculator to calculate your DTI.

Life stages to consider before refinancing

Now that you’ve considered refinancing factors, it’s important to consider where you are in life.

Fresh grad

Most college grads don’t start with a high salary. Although your income might not be high, refinancing for a lower rate could benefit you long-term. A lower rate will keep your loan balance growing at a slower pace.

Also, you can refinance for a lower monthly payment, but doing so will extend your loan term. Remember that you can refinance multiple times if your credit score goes up and you qualify for better terms at a later time.

Getting married or moving in with a partner

It’s not very romantic, but a partnership is also a financial agreement. Many couples cite student debt as a reason why they don’t make a more serious commitment, so if you’re moving in with a partner or getting married, refinancing your student loans may be the right choice.

Buying a home or another financial investment

When making a big purchase, such as buying a home or investing your money, it’s always a good idea to check the rest of your finances. Refinancing could help you feel more secure if you have both student loans and a mortgage.

No matter where you are in life, knowing your options for refinancing can help you feel less stressed by your student loans. You can use our student loan refinancing calculator to see how a different interest rate could help you save.

You can check your rates with Earnest in just 3 minutes, and it won’t impact your credit score.

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About the Author

Sasha Bulatskaya

Sasha is the Senior Manager of Brand and Content at Earnest. She has been writing for ten years and has been focused on educational finance and financial aid for over three. Her passion for mission-driven companies brought her to Earnest in 2020, and she's been helping make student finance more accessible ever since. She strives to demystify personal finance and student loans to help borrowers make the best decisions for their financial situation.

Disclaimer

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.