Student loan refinancing: what you gain and what you give up
Refinancing swaps your loans for a new private loan, possibly at a lower rate — but federal borrowers lose federal protections.
Sourced from official pages · Updated September 30, 2026💡 Key takeaways
- Refinancing replaces your loans with a new private loan at a new rate and term.
- You may lower your rate or payment but you give up federal protections if you refinance federal loans.
- Once federal loans are refinanced, you cannot get the federal benefits back.
- Compare APR, fees and cosigner terms across lenders and run the math first.
How it works
A private lender pays off your existing loans and gives you a new loan with a new rate and term. The new rate depends mainly on your credit, income and the term you choose.
What you may gain
- A lower interest rate, which can reduce total interest.
- One monthly payment.
- A shorter or longer term to fit your budget (a longer term lowers the payment but usually raises the total cost).
What you give up if you refinance federal loans
- Federal repayment plans such as RAP and income-driven options.
- Federal forgiveness programs, including Public Service Loan Forgiveness.
- Federal deferment and forbearance options.
Once federal loans are refinanced into a private loan, you cannot get the federal benefits back.
Check the math first
Use the loan calculator’s refinance break-even tool to compare payments and total interest, and compare APR, fees and cosigner terms across lenders.
When refinancing might make sense
- Your loans are private and your credit has improved.
- You have a stable income, an emergency fund and do not expect to need federal protections.
- The new rate is lower without a longer term that increases total interest.
When to think twice
- You may want income-driven repayment or forgiveness programs.
- Your job is uncertain.
- The savings come mostly from a much longer term.
Steps
- List every loan with balance, rate and type.
- Get quotes from several lenders (soft checks first if offered).
- Compare APR, term, fees and cosigner release.
- Use the student loan calculator to test the payment and total interest.
🔤 Key terms
| Term | Meaning |
|---|---|
| Refinance | Replace existing loans with a new private loan |
| Hard inquiry | Credit check from a full application |
| Prequalification | Estimate using a soft check |
| Autopay discount | Rate reduction some lenders offer for automatic payments |
Questions to ask a lender
- Is the rate fixed or variable?
- What is the total cost over the term?
- Are there fees or prepayment penalties?
- Is cosigner release available?
- What hardship options do you offer?
🧮 Example: shorter vs longer term
On a $30,000 balance at 6.52%, a 10-year term costs about $340.95 a month, and a 20-year term about $224.03. The lower payment on the longer term comes with about $12,852 more interest. Illustration only.
⚠️ Common mistakes to avoid
- Refinancing federal loans without valuing the benefits you give up.
- Choosing the lowest payment instead of the lowest total cost.
- Signing with a variable rate without understanding the cap.
- Not checking for prepayment penalties or fees.
🛠️ Try it yourself
❓ Frequently asked questions
Can I refinance private loans?
Yes, if you qualify with a new lender.
Does refinancing hurt my credit?
Applications may involve a hard inquiry; see the credit inquiries guide.
Can I refinance only some loans?
Often yes; ask the lender.
Should I refinance federal loans?
Only after weighing the federal protections you would give up.
📚 Sources
This guide is general information, not financial, tax or legal advice. Rules and limits change; confirm with the sources above or a licensed professional.