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How Soon Can You Refinance Student Loans?

April 22, 2019 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

How Soon Can You Refinance Student Loans?

If you’re a soon-to-be college graduate, there’s little doubt you’re busy right now. Besides wrapping up classes and hanging tight to your hard-earned GPA, you’re also likely trying to get a job, finding a new place to live and, of course, spending quality time with friends you might not see again for a while.

But somewhere in that busy schedule, like it or not, you’re probably going to want to take a look at your finances—specifically what you’re going to owe in student loans, and when and how you plan to repay them. The sooner you deal with debt, the more able you’ll be to get ahead of it as you embark on your new career.

Which means you’ll want to know all your student loan repayment options before you graduate—including the pros and cons of consolidating or refinancing your loans, which could make your life easier and your payments more manageable.

If the only time you’ve even thought about your student debt is when you borrowed the loans, you’ve got a little bit of homework to do and a few decisions to make. Fear not.

Here are answers to some of the questions you’re most likely to have as you proceed. Oh, and before we dive in, we should mention that we’re going to try to break down this super complex topic, but you should know that this info is general in nature and does not take into account your specific objectives, financial situation, and needs; it should not be considered advice. SoFi always recommends that you speak to a financial professional about your unique situation.

Where Should I Start?

First, find out what kind of student loans you have and what the terms are.

•  If you have federal student loans to locate, you can go to the National Student Loan Data System , then check into the repayment options that are available for your loans. This might help you determine if those programs benefit you or if you’re better off applying for a consolidation loan or refinancing.

•  If you’ve lost track of private loans, you can check your credit report .

Consolidation vs Refinancing Student Loans?

The two terms are easily confused, but they aren’t the same thing.

Usually when you hear the term “consolidation” in the context of student loans, it’s referring to student loan consolidation, which is a government program.

It allows you to combine your federal loans into a single loan with one payment, but you can’t include your private loans, so you’ll still have a separate payment for those.

Your new interest rate will be the weighted average of your prior loan rates, rounded up to the nearest one eighth of 1%. If your loans are eligible for a Federal Direct Consolidation Loan, you can apply right after you graduate , when you leave school, or when you drop below part-time enrollment.

You might, however, be able to combine all your loans—private and federal—into one payment, possibly with a more competitive interest rate, by refinancing your student loans with a private lender that offers this opportunity.

How Soon Can I Refinance?

Many people want to know when is the soonest they can refinance. Is it possible to refinance while in school? Most likely not. Most students may not have the financial track record required for refinancing; they lack a payment history, a degree, or a robust income. If you’re a graduate student with a good job, you might be able to refinance the loans you took out for your undergraduate degree.

Otherwise, you’ll probably have to wait until after you graduate. And remember: If you find that refinancing will result in significant interest savings, every month you put it off could be costing you money.

What Should I Do with My Grace Period?

Most federal loans and some private student loans offer a grace period —usually about six months—before you must begin making payments. The idea is to give you time to get settled in your new job and to get on your feet when you’re out of school. But depending on what kind of loan or repayment plan you have, interest might still accrue during your grace period, and your lender may “capitalize” that interest.

Wait, what? What’s “capitalized interest” ? When interest isn’t paid as it accrues during your grace period, your lender may add it to your principal balance. Interest is then charged on that higher balance, further increasing the overall cost of the loan.

Besides educating yourself about the best repayment options for your situation, you should be researching which lender you might want to go with if you decide to refinance your student loans.

If you’re unsure about how soon after graduation you’ll be ready to make payments on a new loan, you should know that some private lenders, including SoFi, may honor the first six months of any existing grace period connected to the loans you refinance. So, you can set up your refinanced SoFi loan when you graduate without starting payments right away.

Exploring Interest Rates

Before deciding whether refinancing is right for you, it’s a good idea to think about the interest rates and perks associated with your federal loans. When you refinance your federal loans with a private lender, your loans are no longer eligible for federal loan benefits.

If you can’t find a better interest rate than what you already have on your federal loans, you may want to leave your loans alone.

Because like we said, some federal student loans offer benefits and protections that won’t transfer to a refinanced private loan.

For example, you would lose the ability to defer your loans or put them in forbearance if you were to refinance. Whereas with federal loans, if you run into trouble making a payment on a federal loan, you may be able to temporarily lower or postpone your payment by putting the loans into deferment or forbearance.

There are also student loan forgiveness programs available to qualified graduates with certain federal loans. And most federal student loans are eligible for some type of income-driven repayment plan, which bases your payment on a percentage of your discretionary income. That’s also a benefit you’d lose when refinancing.

What to Look for in a Private Lender

Private student loan lenders can have some pretty stringent criteria for granting loans. Typically, you’ll need a good credit score and a history of on-time payments, a stable job and/or income (or a cosigner), and a solid debt-to-income ratio.

A lower interest rate can help you reduce the amount you pay over the life of your loan. So your primary goal in refinancing should be to find the best rate you can. Of course, there are other things you’ll want to know too, including the lender’s reputation for good customer service and support, and its willingness to work with you if you run into some sort of hardship.

If you refinance your student loans with SoFi, you may get a competitive interest rate, unemployment protection, and other benefits—including a SoFi membership that entitles you to services that go well beyond student debt and might help you with your career and personal goals. SoFi isn’t like traditional lenders; the company takes a positive and holistic approach to working with its members.

If you’re interested in refinancing your student loans to a lower interest rate, see what SoFi can offer you in two minutes or less.


The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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