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Should You Refinance Your Student Loans?

Updated: Mar 17, 2021

An approachable guide to reviewing your student loan debt, and what next steps to take

Icon of a graduate wearing a grad cap and gown

Student debt is both a hot topic and a confusing one. Most college grads have some sort of debt, so it's understandably top of mind for many people. But, just because it's top of mind, doesn't mean we're attacking it the way we should!

It's emotionally exhausting for many of us to determine the best course of action when it comes to our student loans—Do nothing? Refinance some? Refinance all? Remove a co-signer? Pay off aggressively or save those dollars for retirement, for other debt, or for building an emergency cash reserve?

It's tempting to take the route of "ignorance is bliss," but when it comes to student debt, not addressing it will only create more (costly) trouble. And listen: there are some great tools out there to make your decision a straightforward one. Really.

The current student debt landscape

When we say most college grads have some sort of debt, we truly mean it!

  • 60 percent of college graduates have some sort of debt

  • 70 percent of borrowers have delayed saving for retirement because of their debt

  • 30 percent student loan borrowers move back in with their parents after graduation​

  • $1.41 trillion in total outstanding student loan debt

  • $27,975 average debt per borrower

  • 44 million student loan borrowers

  • $620 billion more than the total U.S. credit card debt

Explore your alternatives

Student loans are an incredibly common sore subject for many, partly because they don't understand their choices. It makes perfect sense, too, considering we're facing a whopping $1.41 trillion in student debt. Who wouldn't be a bit flustered by that?!

It's important to take a step back and realize that you have options. If you have student loans, your main alternatives are:

  1. Do nothing. WAIT! If you did your homework and concluded that this is the right decision, then okay, move forward. But! If you are doing nothing because you are ignoring your student debt, not okay! Explore your other two options.

  2. Refinance some. Refinance only your private loans.

  3. Refinance everything. Yep! The whole kit and caboodle!

Weighing your options: pros and cons of refinancing

Refinancing your student loan debt can be a great option for your financial situation. However, it's not the go-to answer for all. Review the below key points to determine if refinancing your student loans is right for you.

The Pros:

  • Pay less interest over the lifetime of your loan.

  • Lower your monthly payments. This may sound like gravy, but be forewarned! By reducing your rate or extending the life of your loan, you may actually increase your total interest. That means you'll end up paying more in the long run, which is definitely not ideal.

  • Simplify your bills by aggregating them under fewer loans. It's nice to only have one bill payment, rather than several. This can help you stay on top of your payments better, and help keep you from missing a deadline.

  • Removing a co-signer or transfer from a parent PLUS loan.

  • Getting a new service provider that may offer different perks.

The Cons:

  1. You could lose some repayment options, such as loan forgiveness, deferment, or forbearance for some federal loans

  2. The action is irreversible. You can't "un-refinance" your loans. This is a decision that, once you make, you're in it for the long haul. Now, that doesn't mean it's wrong! That just means it requires careful thought and consideration.

  3. Not everyone is eligible. Unfortunately, you have to qualify for a student loan refinance.

  4. You might pay more interest over time, if you extend your repayment term. Like we mentioned above, while refinancing your student loans may lower your monthly payments, you might end up paying more in the long run.

Our recommendation

First, make sure your finances are in check. You'll want to ensure you have a budget (and, yes, your student loan debt is part of your larger budget!) and get an idea of your net worth snapshot (so you know how much you have, how much you owe, and how much you have left over). You can always take a step back and give yourself a financial wellness check-up.

Next, set aside 30 minutes for an evaluation. We find the following two infographics particularly straightforward to determine if should you refinance your loans and the best repayment option on federal loans.  

#1: Should you refinance

Infographic to determine if you should refinance your student loan

FYI Federal Title IV: Title IV is a term that refers to federal financial aid funds. You can search by school here).

#2 What is the best repayment option on federal loans

Infographic to choose the best student loan repayment option for you

Source: NerdWallet

Your To-Dos

  1. After you've looked at the above evaluation, you should have a good sense of if you'd be eligible for a refinance, consolidation etc.

  2. We highly recommend you use an online student debt platform like Student Loan Hero or Earnest for a more complete evaluation and the application process.  

  3. Stick to your plan.

Download Pocketnest and get your finances in order—in just 3 minutes a week! No jargony finance-speak, pricey fees or in-person meetings required.

Have questions? We love your questions! Email us at

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