Once you understand a few basics about which student loans to refinance – and when it makes sense to do it – you can save thousands and simplify repayment for yourself. Take a few tips from us.

When it comes to saving money, navigating interest rates, and understanding credit scores in relation to student loans, #TimingIsEverything. Here are some easy tips to help you decide when it makes sense to refinance your student loans – and when it doesn’t.

3 Times When You Should Refinance Student Loans

  1. After grace periods. Federal student loans offer a six-month grace period right after you graduate from your undergraduate program or if you continue on to graduate school (Don’t go to grad school just to avoid loan repayment!). Don’t refinance before your grace period is over – you don’t want to make payments before you have to!
  2. If you have high loan balances with high interest rates, refinancing them at a lower rate will save you thousands in interest over time – and reduce your monthly payments now. The sooner you start benefitting from lower interest on your large balances, the better. In fact, refinancing in early stages of repayment may bring your monthly payment down so low that you can make extra payments at the lower interest rate, too.
  3. When you have good income and credit. Once you have a stable job with a steady income, have established good credit, and are confident you can make monthly payments, it’s a good time to look at interest rates on all your student loans. Compare your current rates with refinance rates you qualify for with various lenders. A student loan repayment calculator like U-fi’s helps you figure out how much you’ll save in different scenarios. See where you’d save the most and have good borrower benefits – and then take action.

3 Times When You Shouldn’t Refinance Student Loans

Obviously, when interest rates are higher than what you currently have, you won’t want to refinance your private or federal student loans. But here are three other important scenarios when you don’t want to shop around for refinancing loans – at least not for all of your student loans.

  1. (For any loans) You have bad credit. You may have trouble finding a better rate than you already have when your credit is bad. Work on improving your credit and then think about refinancing. However, if you can find a cosigner with good credit who’s willing to take responsibility for your debt if you don’t make payments, refinancing and making on-time payments with that cosigner can help you build your credit. Plus, some lenders (like U-fi) offer cosigner release after 24 on-time payments.
  2. (For federal loans) You work in the public service sector (government or nonprofit) and you plan to stay there. After you’ve made 120 payments toward your loan, you could qualify for federal loan forgiveness. (This could also apply if you’re a teacher in a low-income district, are or were in the military, or are a doctor or nurse in certain states.)
  3. (For federal loans) Your federal loans are in a repayment plan based on your income (either one of the income-based repayment plans or pay-as-you-earn plans). These help you qualify for low or no payments while you’re earning less money. These highly flexible payment plans are tough to beat with private loans, so if you need this flexibility (or think you may), don’t refinance your federal student loans. Keep your options open with them.

Most students need to borrow private loans to help pay for college, but be smart about it. That’s what U-fi is here for. Get started with U-fi today.

Ron Hancock
Written By:

Ron Hancock is the Regional Director for U‑fi Student Loans and is an expert in many aspects of financial aid, student loans, and debt management. A graduate of the University of Oklahoma, Ron has worked in a number of areas of higher education finance, including positions in a college financial aid office, training and development for a state agency, and most recently as National Manager for Nelnet’s Partner Solutions team. Ron has spoken at numerous financial aid conferences all across the United States.

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