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If you’re struggling to repay your student loan, refinancing can be a helpful option. It can potentially help you get a lower interest rate, more affordable monthly payments, and updated loan terms.

Plenty of borrowers refinance their loans to better fit their post-graduation financial situations. According to 2025 data from Enterval Analytics, about 20% of all private student loan debt (or $29.6 billion) is refinanced student debt.

But refinancing works better for some borrowers than others — and you may come out ahead financially by sticking to your existing loan, especially if it’s a federal student loan. Here’s how you can decide if refinancing is right for you and how to get started.

When you refinance a student loan, you take on a new loan to replace your existing education debt. You can refinance multiple student loans into one new loan, which allows you to consolidate your debts and make it easier to manage repayment and track progress.

Student loan refinancing is available from private lenders, so the terms of your new loan will depend on your credit score, income, and other financial factors. With great credit, the new loan may offer a better interest rate on your debt, along with an updated monthly payment amount and loan term.

For example, say you have a $15,000 student loan with a 10% fixed interest rate and a five-year repayment term. With fixed monthly payments, you’ll pay about $318 each month over the five-year period and pay $4,122 in total interest.

Now, let’s say you have the opportunity to refinance your $15,000 student loan. You’ve increased your credit score since you took on the initial debt, and you’re able to qualify for a lower 6% fixed interest rate. You want to keep the five-year repayment period to pay down the loan faster.

With just the interest rate change, you can bring your fixed monthly payment down slightly to about $290, and you’ll pay a much lower $2,400 in total interest over the entire repayment period.

Original 5-year loan

Refinanced 5-year loan

Amount

$15,000

$15,000

Interest rate

10%

6%

Monthly payment

$318

$290

Total interest paid

$4,112

$2,400

Savings

—

$1,712

Read more: Should you refinance your student loans?

The two primary reasons to refinance your student loans are a lower interest rate and simplified loan payments.

A lower student loan interest rate can reduce your monthly payment and the total amount of interest you’ll pay over the lifetime of the loan.

If you previously took on a private student loan when interest rates were high, you can save by refinancing when rates go down. Or if you took out a loan as a student, your credit may have improved after graduation, allowing you to qualify for a better rate. You can also refinance a student loan with a variable rate to one with a fixed interest rate to avoid fluctuations as rates change over time.

To get the best private student loan rates — which can be lower than today’s federal student loan rates — you’ll need a strong credit history and credit score, stable income, and a good debt-to-income ratio. These are all factors that lenders look for when you apply for a new loan.

If you don’t already have strong credit, you may want to consider refinancing your student loan with a well-qualified co-signer who can help you qualify for better rates.

Over the course of your education, you’ll likely take on multiple student loans, which may come from different sources. That means you could have multiple monthly payments when it’s time to begin paying off those debts.

By refinancing, you can consolidate what you owe into one monthly payment. Making a single payment toward your student loan each month can help you more easily track your progress and lower your risk of missing a payment.

If you have federal student loans, think twice before you refinance.

For one, there’s a good chance you already have low interest rates. Over the past decade, Direct Subsidized and Direct Unsubsidized federal student loans have largely remained under 5%. Current federal loan rates are over 6% — which is still lower than you may be able to refinance for.

Plus, federal student loans have added protections, including loan forgiveness programs, more flexible repayment options, and other benefits that can help you during the repayment process.

Make sure you understand exactly which federal loan perks you may be giving up before you decide to refinance to a private loan. If you go through a period of hardship in the future, you won’t be able to rely on the same protections with a private lender.

Read more: Is student loan refinancing worth it? What to know before you apply.

Here’s a step-by-step look at how you can refinance your student loans today:

Before you apply for a new loan, decide how exactly refinancing can help you meet your goals. One or more of the following may apply to your situation:

If you want to pay less overall, focus on finding the lowest possible interest rate. If you don’t already have strong credit, you may want to find a co-signer or wait and refinance when you’ve increased your credit score and income so you’ll qualify for the best rates.

If you want to lower your monthly payments, compare the repayment periods offered by each lender. Make sure you review the potential monthly payment amount of each option to find one that works with your budget. Just remember that lower monthly payments now could mean a longer repayment period and more interest owed over the lifetime of the loan.

If you’re focused on consolidating your loans into one payment, account for each existing loan when you apply. You should make sure the loan amount you apply for is enough to cover your total existing student loan balance.

Compare the details of different student loan lenders to find one that’s right for you.

Look at interest rates (including fixed and variable rates), repayment terms, potential fees, repayment options, loan amounts, and other details. Some lenders may have certain requirements you must meet in order to qualify for a refinanced student loan. For example, you may be required to refinance a minimum loan amount, earn a minimum income, or have completed your degree.

If a lender offers prequalification, you can see the loan terms you may be eligible for with only a soft credit check. You’ll get a better idea of your potential loan details, and your credit won’t be affected until you decide to submit a full application.

Once you find the right lender, you can submit your application online.

Be prepared with your personal information and information about your loan, including the loan amount you’d like and the type of loan you’re refinancing. You may also need specific documents on hand, including proof of income, identification, recent student loan statements, a school diploma or final transcript, and more.

After you submit your application and get approved, read the specific terms of your official loan agreement before you sign it. Those details will help you understand exactly what you owe the lender and how to avoid fees and penalties.

Your new lender will pay off your existing loan or loans, but you should review the details of this transfer. The existing loan payoff may not happen immediately, so you should continue to make payments toward your old loan until the payoff is confirmed. You’ll also want to know exactly when you’re expected to start making payments toward the new loan.

Consider setting up automatic monthly payments with your new lender. This can help you avoid any payments or late fees. With most student lenders, you can also get a small interest rate discount for setting up autopay.

Student loan refinancing can lower your rate — or cost you benefits. See the pros, cons, and who should refinance.

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