How federal and private repayment are compared
Refinancing swaps your federal loans for a private loan at a new rate. If you earn well, your job is secure and you have no interest in forgiveness, it can genuinely save you money. It's also permanent: you can't go back, and everything the federal system was holding for you goes with it.
Find your best federal outcome
We run every federal plan you qualify for and take the cheapest total, including any balance that would eventually be forgiven.
Model the private loan
A private refinance is a straightforward amortizing loan: the rate and term you were quoted, paid in level monthly installments until it clears.
Compare both totals
We show the monthly difference and the lifetime difference. If the federal path forgives anything, that amount is counted as value you would forfeit.
Weigh what's not in the numbers
Income-driven payments, forbearance, deferment, death and disability discharge and PSLF have no price on this page, but they're the reason most borrowers shouldn't refinance.
The comparison
- Federal total = the cheapest eligible federal plan, simulated month by month.
- Private total = level payment x number of months, using the quoted rate and term.
- Monthly difference = private payment - best federal payment.
- Lifetime difference = private total - federal total.
- Forgiveness forfeited = whatever the federal path would have canceled.
A refinance only gets recommended here when it costs less in total AND the federal path wasn't going to forgive anything. Saving money while giving up a larger forgiveness isn't a saving.
Who refinancing helps, and who it quietly hurts
Similar balances and similar rates, three very different outcomes.
Whether refinancing makes sense depends far more on your situation than on the rate.
| Situation | Refinance? | Why |
|---|---|---|
| High income, small balance, private sector | Often yes | You'll repay in full anyway, so a lower rate is pure saving. |
| Working toward PSLF | No | You forfeit forgiveness worth far more than any rate cut. |
| Low income relative to balance | No | Income-driven payments and eventual forgiveness are worth more. |
| Unstable or commission income | No | You lose the ability to lower your payment when income drops. |
| Already has an emergency fund and job security | Maybe | The protections you give up matter less. Compare the totals. |
Ways to refinance without giving up everything
Refinance only part of your debt
You can refinance some loans and leave others federal. Refinancing the highest-rate loans while keeping the rest protected is a middle path most people never consider.
Variable against fixed
Variable rates start lower and can rise. On a term of ten years or more, a fixed rate is usually the sounder choice unless you expect to clear the loan quickly.
Shorter terms carry lower rates
A five-year refinance is usually offered at a lower rate than a fifteen-year one, but the monthly payment is much higher. Only take a short term you can definitely sustain.
Shop without damaging your credit
Most lenders offer a rate check using a soft credit inquiry. Gather several before letting anyone run a hard inquiry.
Refinancing mistakes you can't undo
Federal protections don't come back once a private lender holds the loan.
Refinancing while pursuing PSLF
This ends PSLF eligibility permanently and immediately. There's no appeal and no way to undo it.
Treating the advertised rate as your rate
Headline rates go to borrowers with excellent credit and high income, often with a co-signer and an autopay discount. Get an actual quote.
Ignoring the loss of income-driven repayment
If you lose your job, a federal plan can drop your payment to almost nothing. A private lender will offer a few months of forbearance at best.
Refinancing to a longer term for a lower payment
This usually increases what you pay overall even at a lower rate, because you're paying interest for more years.
What you're actually exchanging when you refinance
Refinancing is usually presented as a rate decision. It's not. It's a decision to leave one legal system and enter another, and the rate is only the price quoted for doing so.
A federal student loan isn't simply a debt at a rate. It's a debt that comes bundled with a set of statutory protections: the right to move to an income-driven plan if your income falls, eligibility for forgiveness programs, discharge on death or total and permanent disability, access to deferment and forbearance on defined terms, and rehabilitation routes out of default. None of those are courtesies your servicer extends. They're written into law.
A private refinance loan is a commercial contract with a bank. Whatever it offers is whatever that lender chose to put in the agreement, and it can be changed at renewal or sold to another institution. Some private lenders offer hardship programs. They're discretionary, typically short, and they're not the same thing.
So the honest framing is: you're selling a package of insurance policies in exchange for a lower interest rate. Whether that's a good trade depends entirely on how likely you're to need the insurance.
The protections, priced honestly
It's easy to list the things you lose and hard to know what they're worth. This section tries to put a value on each, because a list without values isn't a decision aid.
Income-driven repayment
This is the largest one. On a federal loan, if your income collapses, your required payment falls with it, potentially to a very small figure. On a private loan the payment is the payment. A borrower who loses their job with a federal loan has a plan change available. The same borrower with a private loan has a default.
Its value isn't the average case, it's the bad case. If there's a realistic chance of a year with little or no income in the next decade, whether through redundancy, illness, a career change, further study or caring for a family member, this protection is worth more than any rate saving on offer.
Forgiveness eligibility
Refinancing permanently ends any possibility of PSLF and any income-driven cancellation. For someone working in the private sector with a high income who will clearly repay in full, this costs nothing, because they were never going to receive either.
For anyone who might move into public service later, it's a large and irreversible bet on their own career path. Careers change more than people expect over a ten-year repayment term.
Death and disability discharge
Federal loans are discharged on the death of the borrower, and on certification of total and permanent disability. Private lenders vary: some offer death discharge, some don't, and some pursue a cosigner. Disability provisions are far less common.
This matters most where a parent or partner has cosigned, because without a discharge provision the debt becomes theirs. Read the specific agreement rather than assuming the industry norm, and if you have a cosigner, read it twice.
Deferment, forbearance and default handling
Federal loans have defined entitlements to pause payments in specified circumstances, and defined routes out of default including rehabilitation, which can remove the default from your credit record. Private loans have whatever the lender offers, usually a few months of discretionary forbearance, and default is handled as an ordinary commercial default.
The interest subsidy features of the new plans
Under RAP, unpaid accrued interest is waived rather than capitalized, and a $50 principal credit applies each month. Those are meaningful for a borrower whose payment doesn't cover the interest. They vanish on refinancing, and a private loan will capitalize unpaid interest in the ordinary way.
Why the advertised number is almost never your number
Every refinance lender advertises a rate range, and the figure that appears in the marketing is the bottom of it. That rate is real, and it's available to a specific and narrow group of applicants.
Who actually gets the headline rate
Typically it requires an excellent credit score, a high and stable income relative to the balance, a completed degree in a field the lender likes, several years of employment history, a low debt-to-income ratio, and acceptance of the shortest term and a variable rate. Change any one of those and the quote moves.
The practical consequence is that comparing your current federal rate against an advertised rate tells you nothing. The only figure worth comparing is a quote made to you, on the term you would actually take, with the rate type you would actually accept.
Variable against fixed
Variable rates start lower and are the ones quoted in advertising. They move with a reference rate, and over a ten-year term they will move several times. A variable rate is a reasonable choice on a short remaining term with a balance you could clear quickly if rates rose. It's a poor choice on a long term with a balance you can't.
Note the asymmetry: your federal loan was fixed for its whole life. Swapping a fixed rate for a variable one is a second risk transfer on top of the protections you're already giving up, and it should be priced accordingly.
The term is doing more work than the rate
Lenders quote lower rates on shorter terms, which is why a five-year quote looks so attractive next to your current position. The monthly payment on a five-year term is substantially higher, and it's fixed at that level with no income-driven fallback.
The reverse error is more common and more expensive. Refinancing to a longer term to reduce the monthly payment usually increases the total interest paid, even at a lower rate, because you're paying it for more years. If the goal is a lower monthly payment rather than less total interest, an income-driven federal plan does that without giving anything up.
Shopping without damaging your credit
Most refinance lenders offer a soft-credit prequalification that returns an indicative rate without a hard inquiry. Collect several of those before allowing any hard pull. When you do proceed, cluster the formal applications into a short window, because credit scoring models generally treat multiple inquiries for the same product within a short period as a single event.
The borrower profile refinancing genuinely helps
Refinancing isn't a scam and it's not always wrong. There's a real group for whom it's straightforwardly the right decision, and being clear about who they're is more useful than blanket caution.
The clear yes
The profile that benefits is consistent: a high, stable income in the private sector, well above the balance owed; a secure and portable profession; excellent credit; a substantial cash buffer; no intention of public service work; and a rate materially above what the market would now offer them.
For that borrower the federal protections are theoretical. They will never use income-driven repayment because their income will never be low. They will never claim forgiveness because they will repay in full years before any clock runs out. They're paying for insurance they won't claim, and the premium is the rate difference.
The clear no
The profile on the other side is just as consistent, and the common thread is exposure. Each of these borrowers has a realistic path to a year in which the fixed private payment becomes unpayable, or a real prospect of forgiveness they would be signing away.
- Anyone pursuing PSLF or with any prospect of public service work
- Anyone whose income is variable, seasonal, commission-based or early in a career
- Anyone who couldn't absorb the fixed payment through a year of unemployment
- Anyone with a health condition that could interrupt work
- Anyone whose federal rate is already at or below what they would be quoted
- Anyone considering it primarily to reduce the monthly payment, which an income-driven plan does better and reversibly
The middle, and a way to handle it
Most people are neither profile. A useful and underused option is to refinance only part of the debt. If you hold several loans, refinancing the highest-rate ones while leaving the rest federal captures much of the saving while keeping a federal balance, and therefore keeping access to income-driven repayment on that portion.
It's not a perfect hedge, because the protections apply only to what remains federal, but it converts a single irreversible decision into a partial one. Very few lenders will mention it.
Why the offers multiplied this year, and what that should tell you
If it feels like refinancing advertising has intensified, that's because it has. The end of SAVE moved millions of borrowers onto plans with higher payments at the same moment, and a large population experiencing payment shock is the best sales environment the private refinance industry has had in years.
Payment shock isn't a rate problem
The reason a former SAVE borrower's payment went up is that the calculation of the payment changed, not that their interest rate did. Refinancing addresses the rate. It doesn't address the thing that actually happened, and it removes the mechanism, income-driven repayment, that exists precisely for this situation.
A borrower who refinances in response to payment shock has often converted a temporary affordability problem with a statutory solution into a permanent one without one. This is the single most predictable mistake of the 2026 transition.
RAP changed the comparison in ways the marketing won't mention
RAP caps payments as a share of income, waives unpaid accrued interest rather than capitalizing it, and applies a $50 monthly principal credit. For a borrower with a modest income relative to their balance, that package is worth a great deal, and a private loan offers no equivalent at any rate.
Run the comparison against the plan you would actually be on, not against the payment you're currently making during a transition. Those are frequently different numbers.
How to read a refinance offer
Assume the advertised rate isn't yours until a lender has quoted you specifically. Check whether the quoted rate is fixed or variable, and for how long. Check the term, and compute the total repaid rather than the monthly payment. Check for origination or prepayment fees, which are uncommon but not absent. And read what the agreement says about death, disability and hardship before it matters rather than after.
- Is the quote personal to me, or an advertised range?
- Fixed or variable, and if variable, indexed to what and capped at what?
- What's the total repaid over the full term, not the monthly payment?
- What happens on death or permanent disability, and does a cosigner inherit it?
- What hardship provision exists, in writing, and for how many months?
- Is there an origination fee, and is there any prepayment penalty?
The sequence that prevents the irreversible mistake
Because the decision can't be undone, it's worth being slow about it in a specific order. Each step below either rules the decision out or improves the terms, and none of them costs anything.
Establish what you would be giving up, precisely
Work out what your payment would be on RAP or whichever income-driven plan applies to you, not what it's today. Establish whether you have any qualifying PSLF months already banked, because those have real value and are destroyed by refinancing. Confirm your loan types, since Parent PLUS and consolidation loans have their own eligibility quirks.
Then get real quotes, then wait
Collect soft-pull prequalifications from several lenders, including at least one credit union, which are frequently competitive and rarely advertised. Compare total repaid over the term you would take, at the rate type you would accept.
Then leave it two weeks. The offers will still be there, and the urgency in the marketing is manufactured. Almost nobody regrets waiting a fortnight; a meaningful number of people regret signing in an afternoon.
Ask the two questions that decide it
First: if my income went to zero for twelve months, what happens? If the honest answer involves default, the rate saving isn't worth it, whatever the number. Second: is there any version of the next ten years in which I work for a government body or a non-profit? If yes, even at low probability, weigh what forgiveness would have been worth against what the rate saves.
If both answers are comfortable and the quoted saving is material, refinancing is a reasonable decision made for the right reasons. If either is uncomfortable, the federal system is holding a risk you would otherwise be holding yourself.
- Work out your actual income-driven payment before comparing anything
- Check whether you hold banked PSLF months
- Collect soft-pull quotes from several lenders including a credit union
- Compare total repaid, not monthly payment
- Read the death, disability and hardship terms in the agreement itself
- Consider refinancing only part of the balance
- Wait two weeks before signing
Why refinancing offers multiplied in 2026
The 2026 transition is a refinancing sales opportunity
Private lenders market heavily during periods of federal confusion. A genuinely lower rate can be a good deal, but the pitch won't mention what you give up. This page does.
RAP changed the comparison
Higher RAP payments make refinancing look better on a pure cost basis for some borrowers. The protections you lose haven't changed in value.
Is refinancing worth considering for you?
High earners in the private sector
Stable income, a balance you'll repay in full anyway, and no realistic PSLF path. This is the group refinancing genuinely helps.
Anyone chasing forgiveness
Refinancing ends PSLF and income-driven forgiveness permanently. If either is in play, stop here.
Anyone with unstable income
Commission, seasonal or self-employed. You would be giving up the only mechanism that lowers a payment when income falls.
What you gain, and what you give up for good
What you might gain
- A lower interest rate, if your credit and income are strong
- A single payment and a single lender instead of several
- A shorter term if you want the debt gone faster
- Release of a co-signer on an existing private loan
What you permanently give up
- Every income-driven repayment plan, forever
- Public Service Loan Forgiveness eligibility, immediately
- Income-driven forgiveness at 20, 25 or 30 years
- Federal deferment and forbearance rights
- Death and disability discharge, which many private lenders don't offer
The refinancing figures worth remembering
Deciding whether to leave the federal system
Three verdicts, and what each one means you should do this week.
- Gather several quotes using soft credit inquiries before any hard pull
- Compare APR rather than the headline rate, since APR includes fees
- Prefer fixed over variable on any term of ten years or more
- Consider refinancing only your highest-rate loans and keeping the rest federal
- Wait until you have an emergency fund covering several months
- Run the comparison again after any change in income or career
- Say no and revisit in a few years. The offer will still exist
- Focus on choosing the right federal plan instead
- Ignore marketing that presents this as a limited-time opportunity
Questions about private refinancing
Can I undo a refinance and go back to federal loans?
No. Once a private lender pays off your federal loans, those federal loans no longer exist. This is permanent.
Does refinancing hurt my credit?
The hard inquiry and the new account cause a small temporary dip. The larger effect is on your debt profile, which usually recovers within months.
What credit score do I need?
Most lenders want at least the high 600s, and the best rates go to scores above 750 with strong income. A creditworthy co-signer can bridge the gap, but it puts them on the hook for the debt.
Is consolidation the same as refinancing?
No, and confusing them is expensive. Federal consolidation keeps your loans federal and sets the rate to a weighted average rounded up. Refinancing moves you to a private lender at a new rate and ends federal protections.
Can I refinance private loans too?
Yes, and there's much less downside because private loans carry none of the federal protections. Refinancing private debt to a lower rate is usually straightforwardly good.
What if I refinance and then lose my job?
You owe the same payment. Private lenders may offer short forbearance at their discretion, but there's no income-driven option and no legal right to one. This is the risk you're taking on.
Should I refinance if I have a small balance left?
Usually not worth the effort or the loss of protections. If you'll clear it within a couple of years, the interest saving is small.
Refinancing terms, defined
- Refinance
- Replacing existing loans with a new private loan at a new rate. Permanent for federal loans.
- Co-signer
- Someone who guarantees the loan. They're fully liable if you don't pay.
- Soft inquiry
- A credit check that doesn't affect your score, used for rate estimates.