- When you refinance, you are taking out a new private student loan from a private lender to pay off the balance of your existing loan(s). Once refinanced, you cannot restore access to federal student loan benefits. The new loan will be held by a private lender who is not obligated to offer any of the same options or repayment flexibility that are guaranteed to federal student loan borrowers.
- Federal student loans are made according to rules and regulations overseen by the U.S. Department of Education. Private student loans are made by private lenders and are regulated much like consumer loans.
- Federal student loans generally carry a fixed interest rate that will not change over the life of your loan. The interest rate for a private student loan may be fixed or variable depending on the terms offered by the lender.
- Borrowers with federal student loan are generally guaranteed access to affordable repayment plans, including income-driven repayment options.
Federal student loans offer borrowers deferment and forbearance to provide relief during periods of financial difficulty. In extreme situations such as total and permanent disability, loan discharge options may also be available.
- Based on the type of federal student loan and the repayment program you are enrolled in, you may be eligible for a number of loan forgiveness options. These include Public Student Loan Forgiveness (PSLF).
- Members of the armed forces who obtained their federal student loans prior to being called to active duty are entitled to student loan repayment and interest rate benefits.
- In the event that you default on your federal student loan, the government may refer your loan to a private collection agency. They may also exercise special privileges to collect on your loan, such as wage garnishment and offset of your federal tax return.
- Refinancing a federal student loan does not make it easier to discharge your loan in bankruptcy proceedings. Both federal and private student loans are ineligible for discharge except in the event of undue hardship, which is generally extremely difficult for a borrower to demonstrate.
If you have reliable employment, strong credit, high interest rates, and do not anticipate difficulties in continuing payments should your income change unexpectedly, then refinance may be an appealing option. Refinancing at a lower interest rate can be an excellent way to pay down your loans faster and at reduced cost over the life of the loan.
IonTuition is not a lender or a broker. We are not involved in the loan approval process, nor do we make credit related decisions. The information you provide to IonTuition is not an application for credit and the information will not be used to pre-qualify you with any lender. IonTuition will not check your credit history or verify the information you provide.
Your credit history will only be checked if you provide your consent to the lenders you may contact. If you do contact a lender, that lender may provide a rate quote based on various factors. IonTuition does not refer to all lenders or brokers in the marketplace and therefore cannot guarantee the lowest price or best terms available in the market.