Should I refinance federal student loans? First, see what you give up
Refinancing federal loans with a private lender ends their federal benefits. The Consumer Financial Protection Bureau (CFPB) says this kind of move can’t be reversed. A later rate drop or job loss won’t bring them back.
| Protection | Federal loans | After a private refinance |
|---|---|---|
| Income-driven payments | The Repayment Assistance Plan (RAP), and Income-Based Repayment (IBR) for loans made before July 1, 2026. Payments follow your income. | Gone. The contract sets the payment. |
| Forgiveness after long repayment | RAP after 30 years. IBR after 20 or 25 years. | Gone |
| Public Service Loan Forgiveness (PSLF) | After the equivalent of 120 qualifying payments on eligible Direct Loans, with a qualifying employer. | Gone |
| Unemployment and economic hardship deferment | Available if you qualify, on loans made before July 1, 2027. | Gone, though a lender may offer some relief |
| Forbearance | Available. Loans made on or after July 1, 2027 are limited to 9 months in any 24. | Only what the lender offers |
| Discharge on death or permanent disability | Available. | You may lose it, so read the contract |
The CFPB adds that active-duty servicemembers who consolidate with a private lender lose the ability to qualify for the interest rate reduction under the Servicemembers Civil Relief Act. If you might use any of these protections, a lower rate may not be worth it. Compare your federal options first with our student loan calculator.
How do you compare multiple loans with one new rate?
Use a weighted rate. Multiply each balance by its rate, add those up, and divide by your total balance. A large loan counts for more than a small one. In the example, that comes to 7.45%, even though a simple average of the three rates would be 7.68%.
Weighted rate = (balance₁ × rate₁ + balance₂ × rate₂ + …) ÷ total balance| Loan | Type | Balance | Rate | Monthly payment |
|---|---|---|---|---|
| Undergraduate loans | Federal | $22,000 | 5.5% | $239 |
| Graduate loans | Federal | $30,000 | 8.05% | $365 |
| Private loan | Private | $12,000 | 9.5% | $155 |
| Total or weighted | $64,000 | 7.45% | $759 |
To find savings, this tool doesn’t lean on the weighted rate alone. It runs each loan on its own schedule, so the totals match your actual loans. A federal Direct Consolidation Loan is a different thing: the CFPB says its rate is the weighted average rounded up to the nearest one-eighth of a percent, and it keeps your loans federal.
How much can refinancing student loans save?
It comes down to the new rate and the term. In the example, 6.25% over ten years cuts the payment by $40 a month and saves $4,825 in interest. Any rate below about 7.47% saves money at this term. The CFPB says private rates are based on your credit history, so your own offer may be far from these numbers. This site doesn't publish current refinance rates, since they vary by lender and borrower.
| New rate | 5 years | 7 years | 10 years | 15 years | 20 years |
|---|---|---|---|---|---|
| 5% | $18,591 | $15,073 | $9,598 | Costs $43 more | Costs $10,313 more |
| 5.5% | $17,708 | $13,803 | $7,708 | Costs $3,072 more | Costs $14,602 more |
| 6% | $16,819 | $12,521 | $5,793 | Costs $6,156 more | Costs $18,986 more |
| 6.5% | $15,923 | $11,226 | $3,852 | Costs $9,295 more | Costs $23,463 more |
| 7% | $15,020 | $9,918 | $1,885 | Costs $12,488 more | Costs $28,030 more |
| 7.5% | $14,111 | $8,598 | Costs $106 more | Costs $15,735 more | Costs $32,683 more |
The savings may come mostly from your private loans
This is the number worth checking. Of the $4,825 in the example, refinancing only the $12,000 private loan at the same rate saves $2,465. Adding $52,000 of federal loans brings just $2,360 more, or about $20 a month. That's what you'd get for giving up every protection in the table above. Choose "Private loans only" to run this on your own numbers. Your lender may quote a different rate on a smaller loan, so check.
When a lower payment means paying far more
A longer term lowers the bill and raises the cost. Stretching the example to 20 years cuts the payment by $291 a month. It also costs $21,215 more over the life of the loan, even at a lower rate. The CFPB notes that the lower private rates are often tied to shorter terms with higher payments.
A private payment also stays put if your income falls. RAP's payment follows your adjusted gross income, and its minimum is $10 a month. The table below shows RAP for one borrower with no dependents, against the fixed $719 refinance payment in the example. A private loan may also have a variable rate, which the CFPB warns could rise above your old fixed rate.
| Adjusted gross income | RAP a month | Refinanced loan a month |
|---|---|---|
| $15,000 | $12.50 | $718.59 |
| $30,000 | $50.00 | $718.59 |
| $45,000 | $150.00 | $718.59 |
| $60,000 | $250.00 | $718.59 |
| $80,000 | $466.67 | $718.59 |
| $100,000 | $750.00 | $718.59 |
What if you work in public service?
Then refinancing federal loans could be the costliest choice on this page. PSLF forgives the remaining balance after the equivalent of 120 monthly payments on eligible Direct Loans, while you work full-time for a qualifying employer. RAP and other income-driven plans count as qualifying plans under the final rule.
For a $52,000 federal balance at 6.97% and $55,000 of income growing 3% a year (both examples), RAP comes to about $36,848 over those 120 payments, with about $44,252 forgiven. Refinancing the same balance at 6.25% costs about $70,063 over ten years. Turn on "I work in public service" in the advanced options for your numbers, and confirm your employer and loans qualify with your servicer before you count on this.
If you hold only private loans, or you have steady income and no use for federal programs, refinancing can be a simple rate decision. A student loan counselor or your servicer can help you check which federal rules apply. Check with them directly. The CFPB reported in December 2024 that some lenders gave misleading impressions that borrowers who refinance might not lose access to federal loan cancellation programs.
Common questions
Can I move a refinanced loan back to federal?
No. The CFPB says this kind of consolidation can’t be reversed, so treat it as permanent.
Is refinancing the same as federal consolidation?
No. A Direct Consolidation Loan stays federal and keeps federal protections, though the CFPB notes its rate is the weighted average rounded up. A private refinance replaces your loans with a new private loan at a rate based on your credit.
Should I refinance only my private loans?
Often that is worth testing first, since those loans have no federal protections to lose. In the example, it saves $2,465 on its own.
How long does it take to refinance student loans?
It varies by lender, and we have no reliable figure to give you. Keep paying your current loans until your servicer confirms the payoff.
Does this calculator use my income-driven payment?
No. Its savings figures assume level payments over the years you enter. If you pay on an income-driven plan, your real comparison is different, so use the federal plan table in the results and the student loan calculator. To plan these loans alongside other debts, try the debt payoff calculator.
Sources
- Reimagining and Improving Student Education: final rule, including 34 CFR 685.204, 685.205, 685.208, 685.209, and 685.219 · U.S. Department of Education, Federal Register
- Should I consolidate or refinance my student loans? · Consumer Financial Protection Bureau
- CFPB uncovers illegal practices across student loan refinancing, servicing, and debt collection · Consumer Financial Protection Bureau