Before you refinance federal student loans with a private lender, find out what you would give up

A lender offers you a lower rate on your student loans, and the sum looks good. The part a rate does not show is what comes with a federal loan and goes when the loan is paid off by a private one.

Before you move federal student loans to a private lender, ask which federal protections you would lose, and get the answer in writing, because the change cannot be reversed.

This page is about US federal student loans. If all your loans are private, or your loans are UK government loans, most of it is not about you; the questions at the end and the last section say where to go. If your federal loans are already in default, studentaid.gov lists the Default Resolution Group as the servicer for them, and your servicer is the first call about any federal loan.

What the Consumer Financial Protection Bureau says you give up

The Consumer Financial Protection Bureau (CFPB), a US government agency, answers this on its page Should I consolidate or refinance my student loans? (last reviewed December 2024). Of consolidating federal loans into a private loan it says: “you will lose the federal loan’s benefits and protections. Weigh the benefits and risks since this type of consolidation can’t be reversed.” It then lists what goes:

• Repayment help. It says that you will lose your rights under the federal program, “including deferment, forbearance, cancellation, and affordable repayment options”, such as income-driven repayment, which sets your monthly payment by your income, “although you may still qualify for relief options like forbearance under a private loan.”
• Forgiveness for some jobs. It says borrowers working in public service, or as teachers in certain low-income schools, may be able to get forgiveness on certain federal loans, and that if you refinance a federal loan with a new private loan, you are “no longer eligible to participate in these federal loan forgiveness programs.”
• Discharge if you die or become permanently disabled. It says you may lose this protection, and that many but not all private lenders offer something similar. Ask which your lender does.
• A fixed rate. It says most federal loans have fixed rates, and that if you switch to a private loan with a variable rate, your rate and payment could rise.
• For active-duty service members, an interest-rate reduction under the Servicemembers Civil Relief Act on student loans taken out before your service began, which the CFPB says you lose the ability to qualify for if you consolidate your loans while serving. It also says you might lose the 6 percent interest-rate cap under that Act if you refinance.
• A tax deduction, sometimes. If you combine student loans with non-student debt in one loan, the CFPB says the new loan may no longer qualify for the student loan interest deduction.

Which of these matters to you depends on your job, your income and how secure it is. Someone who may need a lower payment during a bad year is looking at a different trade from someone who has never needed one. The page cannot judge that for you. You can.

The federal side has changed too

The federal protections themselves have been moving. studentaid.gov says that on March 10, 2026 a federal court ordered the Department of Education to stop implementing the SAVE plan, and that people whose loans were in forbearance because they had enrolled in SAVE must choose a new plan. It describes a new Repayment Assistance Plan and Tiered Standard Plan, and says the income-based plans that came before them are closed to anyone who receives a new loan, including a new consolidation loan, on or after July 1, 2026. It says the Public Service Loan Forgiveness program forgives the remaining balance on Direct Loans after the equivalent of 120 qualifying monthly payments under an accepted repayment plan, while working full-time for an eligible employer. So an older article or an online discussion may describe a plan you cannot get, and a plan you do have may be different from the one you remember. Use studentaid.gov’s repayment calculator for what you can choose today.

Moving within the federal system is also a one-way door. studentaid.gov says that a Direct Consolidation Loan’s fixed rate is the weighted average of the rates on the loans combined, rounded up to the nearest one-eighth of a percent, that unpaid interest becomes part of the new loan’s principal, and that consolidation “can’t be reversed”. It adds that if you consolidate on or after July 1, 2026, you will be able to enrol only in the Tiered Standard Plan and the Repayment Assistance Plan for your Direct Loans. It also says you do not have to consolidate all your eligible loans, and that if consolidating would cost you a benefit you are working toward, you should leave that loan out. It also warns that if you consolidate on or after July 1, 2026 and the consolidation loan includes parent PLUS loans, you will only have access to the Tiered Standard Plan, which is not eligible for Public Service Loan Forgiveness.

What people say about the offers

Some people say private refinancing quotes are not what the headline rate suggests, and that the lowest rates go to borrowers with high incomes and large balances. Separately, the CFPB page says the rates you are offered are based on your credit history. One person says getting a quote can involve a hard credit check; ask before you give permission whether it is a soft or a hard check.

In a December 2024 press release, which its site now marks as archived content that may be outdated, the CFPB said that after examining lenders, its examiners found lenders that “gave misleading impressions that borrowers who refinance might not lose access to federal loan cancellation programs.” The release did not name them, and neither does this page. The lesson for a reader is to ask the question yourself and keep the answer.

Some people also say that paying a company to consolidate federal loans for you is a waste. studentaid.gov says there is “no application fee” to consolidate federal education loans into a Direct Consolidation Loan, and that you do not have to pay for help with federal student loans, which your servicer can help with. It adds that a company that asks for fees before doing anything, or promises quick and total forgiveness, is a red flag. If you paid a company and think it misled you, the FTC (reportfraud.ftc.gov) takes reports, and studentaid.gov says to contact your bank or credit card company and ask for payments to the company to be stopped, and to report it through its Feedback Center.

If you are weighing it anyway

Nothing here says a private refinance is wrong. A borrower who has no use for the federal protections may find a lower rate a real saving. The questions below are what keeps it a choice you made with your eyes open:

1. Which of my loans would this pay off, federal, private or both? (The CFPB says a lender can combine “all or some” of your loans, so you can ask to leave the federal ones out.)
2. Which federal protections would end, and where in the contract does it say what you offer in their place?
3. If I lost my income for six months, what would you do? Is that written in the contract or only in the advert?
4. Is the rate fixed or variable, and what is the APR?
5. What is the total I would pay over the whole term, compared with what I would pay now?
6. Is there a hard credit check before the quote?

If the reason you are looking is that the payments are hard, studentaid.gov says: “We strongly suggest switching to an income-driven repayment plan for longer-term payment relief. We also offer deferment or forbearance as options for short-term payment relief.” Your servicer is the place to ask. In the US, the National Foundation for Credit Counseling lists nonprofit credit counselling agencies.

Who this page is not for

If every one of your loans is private, you cannot give up federal protections you never had, and the third question in the FAQ is for you. If you are in the UK, GOV.UK says how you repay a student loan depends on whether you are employed or self-employed, and its page Repaying your student loan is the place for the rules; this page covers no UK nation and does not say what refinancing would mean for a UK loan. MoneyHelper (0800 011 3797) gives money guidance, and StepChange and National Debtline help with debt. In the US, the CFPB takes complaints about private lenders, and studentaid.gov’s Feedback Center takes complaints about federal servicers; the Office of the Ombudsman says it does not take complaints about private student loans.