How Often Can You Refinance Student Loans?

First Republic Bank
October 5, 2020

The short answer is as often as you’d like. You’ll just want to make sure another refinance is the right choice based on your circumstances.

Student loan refinancing is a great way to potentially save money on the overall loan cost — but if you’ve gone through the process once, you already knew that. 

Refinancing Your Student Loans Multiple Times

Here are some of the possible upsides of refinancing your student loans more than once, as well as factors to consider before and during the process.

Note: Currently, all payments for certain types of federal student loans are suspended until May 1, 2022 per an executive order by the President. Interest will not accrue during this time period. (Note updated on 12/22/2021)

Whether you have private or federal loans, now may be a good time to consider whether a refinance — or even an alternative option, like a personal line of credit — can help you save more money per month and pay less in interest.

First Republic’s Personal Line of Credit – access funds with fixed rates from 2.25% APR (with discounts).

1. Pay less in student loan interest over the life of your loans

How it works: One of the most popular reasons people consider refinancing student loans is to save money on the overall loan cost, which often translates into lower monthly payments, as well. These savings usually come in the form of a lower interest rate or shorter term on the loan, meaning the borrower would be paying less in interest over the life of the loan, or is able to pay off their student loans faster. Refinancing your student loans for the second time could provide you with an additional opportunity to get an even lower interest rate than you did the first time around.

Caveats to consider: A lower interest rate may seem nice on paper, but there are still a few things to keep in mind. Be sure to calculate the total interest you will pay – refinancing to a longer loan term could mean you will pay more over the life of the loan, even if your interest rate goes down.

If you’ve already gone through the refinancing process with your federal loans, they would be privately held now, and you could no longer take advantage of the special features — forbearance and income-based repayment, for example — that are specific to federal loans.

However, if getting a lower interest rate is your ultimate objective with a second refinance, keep in mind that private lenders' interest rates are often tied to multiple factors, like elements of your personal finances (including income, credit history, debt-to-income ratio and credit score), as well as the current market rates. Some or all of these factors may be either better or worse than when you refinanced your loan for the first time.

2. Shorten the amount of time you need to make payments on your student loans

How it works: Another factor that is highly desirable when it comes to student loan refinancing is the opportunity to make loan payments for a shorter length of time. For example, if your current repayment plan has you making monthly payments for the next 15 years and you can refinance to a five- or 10-year plan, you could end up saving a good amount over the course of your student loans.

Caveats to consider: A shorter payment time frame could mean less in overall interest, but higher monthly payments. Also, if you’ve already been making payments on your first refinanced plan for a number of years, refinancing again — even to a plan with a smaller number of years — may extend the life of your loans overall. For example, if you refinanced your original student loans to a 10-year plan and are six years into those payments, refinancing to a new five-year plan means you’ll be making payments for 11 years overall, as opposed to 10. This could mean more interest than if you stuck with your current plan, even if your new loan offers you a lower interest rate.

3. Revisit the details of your current student loans

How it works: Checking out opportunities to refinance your current student loans also gives you a chance to go over the details of your existing loans with a professional.

Caveats to consider: Besides walking through the general math of a second refinance to ensure it makes overall fiscal sense, discuss with your provider any additional fees, like origination fees or application fees, that might make refinancing for a second time undesirable. For example, some things you’ll want to discuss are any prepayment penalties that come with paying off your loans before they’re originally due, as well as what would happen to your loans if you were to take advantage of any student loan forgiveness opportunities.

4. Move on to other financial goals more quickly

How it works: Paying off your student loans more quickly through a second refinance and/or paying less on your loans per month could mean that you’re able to start saving for additional financial goals — like early retirement, putting more into your child's college fund or saving more for the down payment on a house — sooner than you may have thought possible.

Besides a traditional refinance, a financial product like a personal line of credit may help you pay off your loans at a lower interest rate, while also offering you the opportunity to start working towards other financial goals as soon as possible. With the flexibility of a personal line of credit, borrowers can take as much as they need from a set amount of money to pay off student loans at a lower rate. Then, if they’re able to pay back the money within their given draw period, that amount would be available to use for additional financial needs.

Learn more about how a personal line of credit works and how it might help you lower your overall student loan costs.

Caveats to consider: Paying off student loan debt more quickly may require making higher monthly payments, which could cause you to defer savings for other financial goals in the meantime. Learn more about whether paying off student loans or investing makes more sense for you.

Bottom line: A second student loan refinance may be good for you

How often can you refinance your student loans? There’s no set limit, but if your goal is to save money on interest, it may make sense to refinance again after your financial standings have improved significantly or you qualify for a better interest rate.

If you think that your overall financial health makes you a more desirable candidate than it did when you previously applied to refinance, now is a great time to check your rates again.

Before applying for a second student loan refinance, it’s a good idea to determine what your overall financial goals are for the foreseeable future and how to best pay off your student loans given your current monthly budget. With that information on hand, you can make an educated decision about whether or not a second refinance is right for you.

First Republic’s Personal Line of Credit – access funds with fixed rates from 2.25% APR (with discounts)1.

1. Annual Percentage Rate. Rates effective as of 06/15/2020 and are subject to change.

Borrower must open a First Republic ATM Rebate Checking account (“Account”). Terms and conditions apply to the Account. If the Account is closed, the rate will increase by 5.00%. Rates shown include relationship-based pricing adjustments of: 1) 2.00% for maintaining automatic payments and direct deposit with the Account, 2) 0.50% for depositing and maintaining a deposit balance of at least 10% of the approved loan amount into the Account, and 3) an additional 0.25% for depositing and maintaining a deposit balance of at least 20% of the approved loan amount into the Account.

Personal Line of Credit consists of a two-year, interest-only, revolving draw period followed by a fully amortizing repayment period of the remainder of the term. Draws are not permitted during the repayment period. Full terms of 7, 10 and 15 years available.

This product can only be used for personal, family or household purposes. It cannot be used for the following (among other prohibitions): to refinance or pay any First Republic loans or lines of credit, to purchase securities or investment products (including margin stock), for speculative purposes, for business or commercial uses, or for the direct payment of post-secondary educational expenses. This product cannot be used to pay off credit card debt at origination.

Personal Line of Credit minimum is $65,000; maximum is the lesser of $350,000 or debt to be repaid at origination plus $100,000. If no debt to be repaid at origination, the maximum loan amount is $100,000. Line of credit cannot be fully drawn at origination.

The terms of this product may differ from terms of your current loan(s) that are being paid off, including but not limited to student loans. By repaying such loans, you may permanently be giving up tax and repayment benefits, including forbearance, deferment and forgiveness, and you may not be able to re-obtain such benefits if this loan is refinanced with another lender in the future.

Contact your legal, tax and financial advisors for advice on deciding whether this is the right product for you. Terms and conditions apply.

Product is not available in all markets. For a complete list of locations, visit Applicants must meet a First Republic banker to open account. This is not a commitment to lend; all lending is subject to First Republic’s underwriting standards. Applicants should discuss line of credit terms, conditions and account details with their banker.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document.

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