3 signs it's time to refinance your student loans today

The time is right for refinancing student loans, with lower interest rates widely available – and plenty of lenders offering them.

A perfect storm is brewing for student loan borrowers, with historically low-interest rates converging with high student loan debt and a burgeoning number of financial lenders ready to cut a loan deal.

When that scenario occurs, it’s a sign that refinancing existing student loan debt into a different loan with lower interest rates is a good idea – and the time to do so is now.

“Student loan borrowers should consider refinancing if they have high-interest rates or want to group multiple loans into one payment,” said Sam Hawrylack, a personal finance expert and co-founder of the How To Fire personal finance blog. “Before taking the leap, keep in mind your credit history. If you have a good score, you should qualify to work with more lenders and be able to get an improved rate.”

If you want to see what kind of low rates you qualify for today, plug in your information into Credible's free online tool


Besides a great credit score, what are the key signs that a student loan refinancing is a “green light”? Financial specialists cite these examples.

1. You can cut the best deals on student loan refinancing

To find the best loans, the best move is to get online and start leveraging the power of student loan refinancing options.

For instance, Credible, the loan rate comparison web platform, enables student loan borrowers to compare prequalified loan rates with 10 lenders within two minutes – without hurting any credit scores.


Financial experts also strongly advise student loan borrowers to pursue a student loan refinancing deal only if they’re gainfully employed.

“Borrowers who are unemployed or have spotty income will likely find refinancing to be difficult or impossible,” said Timothy E. Hansen, CEO and founder of Wealth Growth Wisdom, an online personal finance advisory platform. “The best time to refinance is when you secure a consistent paycheck. A steady income is a clear sign to proceed to consolidate a student loan.”

2. Access to significantly lower interest rates

The number one component of a student loan refinancing deal is interest rates. If you have private student loans, you should consider a refinance while rates are low due to the Fed's emergency cuts. Credible uses your loan balance and estimated credit score to show you your potential savings.


“Most people don't understand the impact of a small increase or decrease in the interest rate on the actual amount of money paid long-term,” said Lamar Brabham, CEO and founder of the Noel Taylor Agency, a financial services firm located in North Myrtle Beach, S.C. "For example, if you ask the average consumer the difference between a 6 percent interest rate and a 4 percent interest rate, they would tell you 2 percent.”

Looking at it differently, the real difference is 50 percent. Six percent is 50% more than 4 percent, Brabham explained. “The difference over time can amount to tens-of-thousands of dollars and possibly hundreds-of-thousands-of-dollars in interest payments,” he said. “Given the current low-interest rate environment, anyone with a student loan needs to compare their current interest rate to what is available out in the marketplace.”

3. Banks are eager to lend

Another sign that it's time to refinance is the fact that the current banking posture is more relaxed due to the COVID-19 crisis which makes it the perfect time to see out a refinancing program, according to Brabham.

“The payoff for a reduced rate can be significant including potential lower payments,” Brabham said. “Even better, you could continue paying the same amount but pay off your loans more quickly because more of your payments will go toward the principle.”

Have concerns about your ability to make payments?

For borrowers concerned about being able to keep making your payments, that struggle is a clear sign to refinance your student loans.


“Make sure that the reason why you can't make these payments is legit and not because you are spending too much on unnecessary goods and services,” said Baruch Silvermann, CEO and founder of The Smart Investor, a free online academy for investors.