Quick answer
Refinance private loans when you can materially lower your interest rate or shorten the term without putting you at risk of unaffordable payments. Never refinance federal loans into a private loan if you need federal features such as income-driven repayment (IDR), Public Service Loan Forgiveness (PSLF), or generous deferment/forbearance rules.

Key considerations (short checklist)

  • Savings potential: Compare total interest paid over the life of the new loan, not just the monthly payment. Use lenders’ calculators and run side-by-side amortization scenarios. (CFPB guidance on shopping for student loan refinances is helpful.)
  • Eligibility: Private refi lenders require strong credit, steady income, and low debt-to-income. Joint applications or cosigners improve approval odds.
  • Benefits lost: Refinancing federal loans into private loans eliminates IDR plans, PSLF eligibility, and federal forbearance/deferment protections (Federal Student Aid: studentloans.gov).
  • Flexibility needs: If you expect income volatility, military service, school enrollment changes, or career moves into public service, federal protections have real value.
  • Term and rate trade-offs: Stretching a loan to lower monthly payments can increase total interest. Shortening the term raises payments but saves interest.

When refinancing private loans makes sense

  • You have strong credit and stable income and can reduce your rate by at least 1–2 percentage points, or shorten the term for big interest savings.
  • You want to consolidate multiple private loans into a single lender for administrative ease and potentially lower fees.
  • You need features a private lender offers (e.g., competitive cosigner-release options, interest rate discounts for autopay).

When you should keep federal loans (do not refinance federal into private)

  • You qualify for or are pursuing PSLF or are on an IDR plan where monthly payments are income-based and forgiveness is possible.
  • You value federal deferment, forbearance, or low-interest emergency protections during hardship. These protections are unique to federal loans (studentloans.gov).
  • Your income is low or unpredictable and you need payment flexibility now or in the near future.

Partial refinancing: a common middle ground
You can refinance only your private loans while leaving federal loans untouched. This preserves federal benefits while lowering costs on private debt. For guidance on that exact strategy, see our article on partial refinancing: Partial Refinancing: When to Refinance Some Loans and Keep Others (https://finhelp.io/glossary/partial-refinancing-when-to-refinance-some-loans-and-keep-others/).

Real-world example (typical outcome)
In my practice I’ve helped borrowers who cut interest costs by refinancing private loans while keeping federal loans for IDR. One client reduced her private loan rate by 2% and shortened the term from 15 to 10 years—monthly payments rose slightly but total interest dropped substantially, and she retained eligibility for PSLF through her federal loans.

Common mistakes to avoid

  • Refinancing federal loans when you expect to use PSLF or IDR.
  • Focusing only on monthly payment instead of total interest cost and loan term.
  • Overextending the term to lower payments without checking long-term interest impact.

How to compare offers (step-by-step)

  1. Gather loan details: balances, rates, terms, and whether loans are federal or private. Use NSLDS and your loan servicer records for federal loan info (nslds.ed.gov; studentloans.gov).
  2. Get multiple rate quotes from private lenders and run amortization comparisons for identical terms.
  3. Factor in fees, variable vs. fixed rate differences, and cosigner requirements.
  4. If you have federal loans, check IDR eligibility and PSLF credit before touching them.
  5. If refinancing, request a written payoff statement from your current servicer and read the new loan contract carefully.

Resources and further reading

Professional note & disclaimer
In my experience, the correct answer is often a hybrid: refinance private loans to save interest while preserving federal loans for their protections. This entry is educational and not personalized financial advice. Consult a licensed financial planner or student loan counselor for tailored recommendations.

Authoritative sources

  • Federal Student Aid (studentloans.gov)
  • Consumer Financial Protection Bureau (consumerfinance.gov)
  • National Student Loan Data System (nslds.ed.gov)

Internal links

Last updated: 2025. Educational purposes only.