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Better to Refinance Sooner

If you will qualify for a lower interest rate, it may be better to refinance your loans sooner and not wait to refinance. 

Reducing your interest rate will save you money on your student loans. The savings start immediately. 

For example, if you are able to refinance a $30,000 student loan from 6% to 3%, you will reduce the monthly loan payment from $333.06 to $289.68 a month, saving $43.38 a month and $5,206 over the term of the loan. 

See also: Why You Should (and Shouldn’t) Refinance Student Loans

Sometimes a lower interest rate involves a shorter repayment term. Suppose that the 3% loan involves a 7-year repayment term. The shorter repayment term increases the monthly payment to $396.40 a month. The total interest savings, however, also increases, to $6,670 over the life of the loan. That’s almost $1,500 in extra savings. 

Use our loan comparison calculator to evaluate the tradeoffs between a lower interest rate and a shorter repayment term. 

If interest rates drop again after you refinance, nothing stops you from refinancing again. There are no prepayment penalties on student loans and lenders do not charge fees for refinancing student loans.

See also: How to Qualify for Refinancing Student Loans

Refinancing a student loan could possibly lower your interest, saving you money. Consider the pros and cons of student loan refinance before you decide. Refinancing federal loans into a private loan means a loss of all of the federal loan benefits – income-driven repayment options, potential for loan forgiveness, generous deferment period if you lose your job or have an economic hardship, possibly loans that are subsidized, and potential widespread forgiveness. 

If you have decided that student loan refinance is right for you, check out our list of the best lenders to refinance student loans

Credible allows you to compare rates from 10 lenders without impacting your credit for free. Splash Financial is a student loan refinance marketplace that matches you with a lender with a low interest rate.

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At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

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Saving For College is an unbiased, independent resource for parents and financial professionals, providing them with information and tools to understand the benefits of 529 college savings plans and how to meet the challenge of increasing college costs.