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Student loan refinancing replaces one or more existing loans with a new private loan, potentially changing your interest rate, monthly payment, repayment term, and total cost. It can be worth comparing offers for private loans, but refinancing federal loans into a private loan gives up federal repayment and forgiveness protections. First decide whether you mean private refinancing or federal consolidation; they are different choices.
Refinancing and federal consolidation are different
Private refinancing means borrowing from a private lender to pay off existing private or federal student loans. The new loan has its own rate and contract, and may combine multiple balances. Your approval and terms depend on the lender’s underwriting.
Federal Direct Consolidation combines eligible federal loans into one federal loan. It does not shop your debt for a private lender’s rate. Its fixed interest rate is the weighted average of the included loans’ rates, rounded up to the nearest one-eighth of a percentage point; unpaid interest may be added to principal. See Federal Student Aid’s consolidation guidance before applying.
As the CFPB explains, consolidation and refinancing serve different purposes. Consolidation can simplify federal-loan repayment while keeping the debt federal. Private refinancing changes the lender and contract.
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What refinancing federal loans can cost you
A private refinance loan does not carry the federal protections attached to federal student loans. The CFPB warns that refinancing federal loans privately can mean losing access to federal income-driven repayment, federal deferment and forbearance, cancellation, and forgiveness options. Review whether you may qualify for Public Service Loan Forgiveness or another federal benefit before including federal loans in a private refinance.
Those protections matter most if your income is uncertain, you may need a federal repayment option, or your work could qualify for forgiveness. Compare their value to the specific private offer, not just its advertised rate. Moving federal loans into a private loan may be irreversible: a private lender cannot restore the federal status and benefits later. The CFPB’s refinancing overview describes these trade-offs.
Understand the rates before comparing offers
Federal rates depend on loan type and disbursement year
Federal Student Aid lists fixed rates for loans first disbursed from July 1, 2026, through June 30, 2027. These rates apply to new loans in that period, not to every existing federal loan. Look up the rate on each of your own loans rather than assuming the current year’s rate applies.
| Federal loan type | Fixed rate for first disbursement July 1, 2026–June 30, 2027 |
|---|---|
| Undergraduate Direct Subsidized and Direct Unsubsidized | 6.52% — U.S. Department of Education, 2026 |
| Graduate or professional Direct Unsubsidized | 8.07% — U.S. Department of Education, 2026 |
| Direct PLUS for parents and graduate or professional students | 9.07% — U.S. Department of Education, 2026 |
See the Federal Student Aid interest-rate table for current federal rates. Federal Student Aid notes, “A fixed rate will not change for the life of the loan.”
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Private refinance rates are borrower- and lender-specific
Private lenders set rates based on underwriting, and a published “starting at” APR is not a personalized offer or a promise of approval. Rates can change over time. As dated examples, KeyBank’s rate disclosure said its APRs were current September 10, 2026, and identified employment, debt-to-income, disposable income, and credit history among its underwriting factors. Firstmark’s page stated that its rates were current July 1, 2026, and described rates through its lender network. Those disclosures describe particular products and dates, not the whole market.
When you receive offers, compare fixed and variable rates separately. A variable rate can rise, increasing payments; check the index, how often the rate resets, and any contractual cap. A longer repayment term can lower the monthly payment but increase total interest. The CFPB’s guidance on refinancing explains why a low monthly payment alone does not establish that an offer costs less.
Compare the total cost, not just the monthly payment
Use each loan’s payoff amount and the lender’s actual terms to estimate total dollars paid. Include the remaining balance, accrued unpaid interest, APR, fees, discounts and their conditions, repayment term, and potential changes to a variable rate. Check whether the contract penalizes prepayment and whether it offers hardship options or cosigner release. Terms vary by lender, so confirm them in the disclosure and promissory note.
Federal Student Aid illustrates how capitalized interest can affect cost in its consolidation cost example. Starting with $27,000 in principal, the example shows $46,425 paid over 20 years when no unpaid interest is added, compared with $53,113 over 20 years when $3,890 of unpaid interest is capitalized into principal. The page does not state the example’s publication year. These are illustrative federal consolidation scenarios, not a refinance quote or a prediction of what a particular borrower will pay.
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For each offer, compare the required monthly payment and total payments over the full term. A smaller payment may simply reflect a longer repayment schedule. Also check when repayment begins and whether any discount depends on maintaining a particular payment method.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Eligibility depends on the lender
There is no universal credit-score cutoff, income threshold, or degree rule for student-loan refinancing. Lenders may assess credit history, verifiable income, employment, debt-to-income ratio, disposable income, legal borrowing age, school or degree status, and whether a cosigner meets their standards. Some products also limit eligible loan types, geography, balances, or repayment terms.
Use the lender’s current eligibility criteria and request a personalized offer; an advertised starting APR does not show whether you qualify or what rate you will receive. For example, KeyBank’s dated disclosure identifies employment, debt-to-income, disposable income, and credit history as factors, while Firstmark’s network disclosures describe partner-specific product terms. Neither establishes a universal standard.
If you apply with a cosigner
A cosigner may help an application meet a lender’s credit or income requirements, but is responsible for the loan under its contract. If cosigner release is offered, it is conditional—not automatic. Confirm whether the loan permits it, how many consecutive on-time payments are required, and what independent credit and income review the cosigner must pass. Firstmark’s page reported release terms of 12 to 36 consecutive on-time payments for certain partners, subject to their then-current criteria; this is not an industry-wide rule.
A practical decision and application checklist
- Inventory every loan. Record whether it is federal or private, its payoff balance, rate and whether it is fixed or variable, accrued interest, monthly payment, remaining term, servicer, and any forgiveness or employer benefit tied to it.
- Check federal benefits first. If federal loans may be included in a private refinance, review your eligibility for PSLF and other forgiveness, income-driven repayment, and federal deferment or forbearance. Compare the value of those options with the specific private offer.
- Request and separate actual offers. Compare fixed-rate offers with fixed-rate offers, and variable-rate offers with variable-rate offers. For a variable offer, read the index, reset schedule, and rate cap rather than assuming the opening rate will last.
- Calculate full-term cost. Compare APR, fees, discounts, monthly payment, repayment term, and total payments. Check how extending the term changes the total interest, even if the monthly payment becomes more affordable.
- Read the contract details. Check minimum and maximum loan amounts, accepted loan types, payment start date, prepayment terms, hardship options, discount conditions, and cosigner responsibility and release provisions.
- Consider federal consolidation separately. If you want to simplify eligible federal loans without turning them into private debt, review the weighted-average rate, repayment term, and capitalization effects of Direct Consolidation.
Before accepting an offer, compare these factors across lenders: rate type; APR, fees, and discounts; term and total paid; payment affordability; hardship protections; cosigner terms; any federal benefits lost; and eligibility limits.
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