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As part of his 2025 fiscal year budget proposal, former President Joe Biden suggested an unrealized capital gains tax for wealthy individuals. Specifically, the tax would have required taxpayers with a net worth above $100 million to pay a 25% minimum tax on unrealized capital gains.

Former Vice President Kamala Harris initially supported the move, which was dubbed a “billionaire minimum tax.” During her unsuccessful presidential campaign, the unrealized capital gains tax proposal was not addressed. The concept earned both support and criticism, partly due to misinformation about which taxpayers would be affected. Learn the details here.

What Are Unrealized Gains?

Capital gains are the profits you realize from the sale of an asset. More simply, it’s the difference between what you paid for the asset and what you sell it for.

If you’re still not sure, here’s another way to phrase unrealized capital gains tax meaning: Unrealized capital gains are profits you haven’t pocketed yet because you haven’t sold the underlying asset.

Why does that matter? Because realized gains are taxable; unrealized gains are not.

You don’t need to report unrealized capital gains to the Internal Revenue Service, or IRS. Reporting is only necessary once you sell the underlying assets for a profit. You can, however, use the value of the assets you own to calculate your net worth and map your financial planning strategy. An online budget planner is a great place to get started with developing your money blueprint.

Recommended: How Much Do You Have to Make to File Taxes?

What Happens If Unrealized Gains Are Taxed?

If unrealized gains were taxed, the result might be a tax bill. That would have been the immediate impact for wealthy taxpayers who were subject to such a tax as it was proposed. If implemented, the tax would have targeted the top 0.01% of U.S. households who are in the very top tax bracket.

Someone subject to an unrealized capital gains tax might need to rethink their tax strategy. They might have to reconsider how they utilize various tax breaks, such as tax loss harvesting, to counterbalance any increases in what they owe.

Kamala Harris’s Unrealized Capital Gains Tax Proposal

While a “Kamala Harris unrealized capital gains tax” proposal made the rounds during the lead-up to the 2024 election, it was initially suggested by former President Biden. Vice President Harris signed off on the proposal, and it later became a discussion topic during her presidential campaign, although she did not publicly address it.

What are unrealized capital gains tax rates? The proposal would have imposed a 25% minimum income tax on unrealized capital gains for taxpayers with a net worth exceeding $100 million.

Other tax measures proposed during the Harris campaign included:

•   Raising the long-term capital gains tax rate for realized gains and qualified dividends to 28% for individuals with taxable income above $1 million. (The top tax rate on these gains is currently 20%.)

•   Increasing the top individual income tax to 39.6% on income above $400,000 for single filers and $450,000 for joint filers. (Currently the top tax rate is 37%.)

•   Limiting like-kind 1031 exchanges to $500,000 in gains.

These types of taxes, as well as the unrealized capital gains tax, are designed to primarily impact high-income earners and wealthier taxpayers.

Assessing Tax Consequences

Taxing unrealized capital gains could have both positive and negative consequences for individuals and the economy as a whole. Hypothetically, the money generated through an unrealized capital gains tax would be used to fund the government budget, as are other taxes. Advocates of an unrealized capital gains tax suggest that it could help to redistribute wealth and ensure that the high net worth multimillionaires and billionaires pay their fair share.

Critics, on the other hand, have suggested that taxing unrealized capital gains would bring problems. Specifically, it could:

•   Create administrative challenges for an already understaffed IRS

•   Force taxpayers to sell their assets to cover the tax owed

•   Disrupt capital markets

•   Deplete the market value of real estate and other assets

•   Discourage investments and innovation that help to drive the economy

During the 2024 election, there were questions raised about exactly whom the unrealized capital gains tax might affect. Claims that it would cost everyday Americans more in taxes made the rounds on social media. Those claims were proven false by a Penn Wharton Business Model analysis.

Recommended: Understanding Taxes on Investment Income

How Capital Gains Are Taxed Currently

Capital gains are subject to a different tax rate than income. Essentially, you’re taxed based on how long you own the asset before you sell. When tracking your money and net worth, keep the following in mind:

•   Assets held less than one year are subject to the short-term capital gains tax rate, which is the same as your ordinary income tax rate.

•   Assets held a year or longer are subject to the long-term capital gains tax rates, which are 0%, 15%, or 20%, based on your income.

•   The longer you hold assets, the longer you can defer paying taxes on capital gains under the current tax structure. That’s an incentive to use a buy-and-hold approach when making investments.

On the other hand, you could end up with a capital loss instead if you sell an asset for less than what you paid for it. Capital losses are deductible, up to certain limits. If you’re filing taxes for the first time with investment gains or losses, you may want to talk to a tax professional about how to minimize what you owe.

Recommended: How to Monitor Your Credit

Example of Tax Calculation of Unrealized Gains and Losses Currently

Calculating unrealized gains and losses on assets you own is fairly straightforward. You simply need to know what you paid for the asset and what it’s worth today. Here’s what the formula looks like:

Unrealized gain/loss = Current market value – purchase price

So assume you buy 1,000 shares of stock for $1 each. Today, those shares are worth $5 each. Your unrealized gains would be $4,000.

Now, assume you bought the same shares for $5 each but their value has dropped to $1 per share. Now, you have an unrealized loss of $4,000.

Currently, unrealized capital gains don’t impact taxes in the U.S., and unrealized losses are not reported. In other words, it is not currently a tax filing mistake if you do not pay taxes on unrealized capital gains.

Recommended: What Is Income Tax Withholding and How Does It Work?

Example of Tax Calculation of Unrealized Gains and Losses After Proposed Unrealized Gains Tax

If an unrealized capital gains tax were to take hold, it would be difficult to calculate the amount an affected taxpayer might owe, since each tax situation is different.

Based on the proposal that was credited to Kamala Harris, you could assume that any unrealized gains a taxpayer had for the year would automatically be subject to a 25% minimum income tax. So if they bought 10,000 shares of stock in January for $500,000 and those same shares were worth $5 million in December, the 25% tax would apply to the increase in value (+$4.5 million).

That assumes two things:

•   That they do not sell the shares, and

•   Their net worth exceeds $100 million

Net worth is not static, and it can change as the value of someone’s assets changes. Someone might have an unrealized gain of significant value, but they might not be subject to the minimum tax as proposed if their net worth doesn’t cross the $100 million threshold prior to tax preparation season. That complication is yet another reason why an unrealized capital gains tax, if ever adopted, might be difficult to implement.

The Takeaway

During the 2024 presidential campaign, an unrealized capital gains tax proposal generated controversy, as there are advantages and disadvantages to making such a significant change to the tax code. As the topic of unrealized capital gains could make headlines in the future, it’s important to understand how buying and selling stocks or other assets for a gain or loss might affect your tax liability. This information can be a vital component of monitoring your finances.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Unrealized capital gains tax meaning?

An unrealized capital gains tax is a tax on gains from assets that you own but haven’t sold yet. Ordinarily, unrealized capital gains are not taxable; you’d owe tax only if you sell an asset for more than what you paid for it.

Does any country tax unrealized capital gains?

Denmark is one example of a country that taxes unrealized gains. Individuals who live in Denmark and own foreign properties are subject to an exit tax that applies to unrealized gains associated with increases in the property’s value. This tax on investment properties applies when the taxpayer departs from Denmark to live elsewhere. In 2024, the Denmark Tax Council proposed a 42% unrealized capital gains tax on crypto assets, but as of December 2025, it has not yet been passed into law.

What is unrealized capital gains tax?

Unrealized capital gains tax is a charge for investment gains that’s assessed before an underlying asset is sold. Capital gains tax is typically assessed only when you sell an asset for more than the price you paid for it. Taxing unrealized gains would not rely on selling an asset to trigger taxes owed on it when it increases in value.

Which countries tax unrealized capital gains?

Denmark and Norway are two examples of countries that tax unrealized gains in the form of an exit tax. In Norway, unrealized gains on shares and ownership interests in Norwegian companies are taxed when you move to another country. The unrealized gains tax rate is 37.84%, though there are some exceptions to the rule.

How do you tax unrealized capital gains?

Taxing unrealized capital gains requires an assessment of an asset’s original purchase price or basis and its current fair market value. The unrealized capital gains tax proposal credited to Kamala Harris outlined a minimum 25% income tax on unrealized capital gains for individuals with a net worth exceeding $100 million. Other countries tax unrealized gains when you move to a different country and become a tax-paying resident there.

How does unrealized capital gains tax work?

Unrealized capital gains tax works by taxing the increase in value of assets you own but have yet to sell. Essentially, it’s a tax on paper profits, which can be problematic if you have assets with unstable or uncertain values.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q425-070

Long-term capital gains tax is the amount of money assessed on gains you reap when you sell an asset you have held for more than a year.

In the U.S., the federal and state governments tax different kinds of income in different ways. The money you make at work, for instance, is taxed at income tax rates. The money you make from investing is taxed at capital gains rates. How much capital gains you pay depends on how long you’ve held the investment, your income, and your filing status. With long-term capital gains tax, you’ll pay a 0%, 15%, or 20% tax.

What Is Capital Gains Tax?

Whether you’re filing taxes for the first time or have been doing so for years, capital gains tax might still be new to you. Here’s a quick primer.

•   Capital gains tax is a type of tax designed primarily as a way for governments to generate revenue by taxing the money you make when you invest.

•   These fees are taxes on investment income, which helps create a comprehensive tax system in which wealth generated through investing is taxed in addition to wealth generated by labor.

Capital gains tax may also be seen as a mechanism that promotes wealth equality because wealthy individuals often accrue more investment returns.

Recommended: What Is Income Tax Withholding and How Does It Work?

What’s Considered a Capital Gain?

A capital gain occurs when you buy an investment and sell it for more than you paid for it. The gain is the difference between the purchase price and the sale price. For example, if you buy a stock for $30 and sell it for $50, you’ve generated a capital gain of $20. You’ll only owe taxes on this gain.

You can also have a capital loss. Say you buy another stock for $30 and sell it for $15. In this case, you’ve generated a loss of $15, which is not subject to tax at all. In fact, you can use capital losses to offset your gains. Offset your $20 gain from the example above with your $15 loss, and you’ll have a net gain of $5. You may only owe taxes on that amount.

There are several common assets that may be subject to capital gains taxes including:

•   Stocks, bonds, and index funds

•   Commodities

•   Real estate investments (though you may qualify for certain exemptions on the sale of your primary residence.)

•   Business interests

•   Collectibles

Short-Term vs. Long-Term Capital Gains

There are two types of capital gains: short-term and long-term gains. You owe short-term capital gains tax on investments you’ve held for one year or less and sold for a profit. Short-term capital gains are taxed at the same rates as your ordinary income based on your tax bracket.

Depending on how much money you make (say, considerably more than the average salary in the U.S.), these rates can be relatively high.

You owe long-term capital gains tax on the profit you’ve made from the sale of investments you’ve owned for a year or more. The government taxes these at a preferential rate to encourage long-term investing.

Recommended: Credit Score Monitoring

What Is the Long-Term Capital Gains Tax Rate?

The long-term capital gains tax rate is 0%, 15%, or 20%, and it depends on your income and your filing status. The following rates are for long-term capital gains made in 2025.

Worth noting: The long-term capital gains tax 2026 shares the same rates, but the qualifying incomes in the brackets are slightly higher to reflect the impact of inflation.

How Capital Gains Taxes Work

To better understand how tax on long-term capital gains works, here’s an example:

•   Say you bought $5,000 worth of shares in a mutual fund.

•   You sell them 10 years later for $10,000, which means you have a $5,000 taxable gain.

•   If you make $70,000 per year and file a single tax return, your long-term capital gains tax rate will be 15%.

•   That means you’ll owe 0.15 x $5,000, or $750 in long-term capital gains tax on the amount your fund rose in value during the time you held it.

By knowing the amount you’ll need to pay, you can better prepare for and track your budget and outflow of funds at tax time.

Recommended: How Much Do You Have to Make to File Taxes?

Capital Gains Tax Strategies

There are several ways you can reduce capital gains taxes or otherwise use them to your advantage.

•   Hold your investments as long as you can: Hang on to investments for more than a year whenever possible to qualify for preferential long-term rates.

•   Use tax-advantaged accounts: When you can, invest inside of tax-advantaged accounts, such as 401(k)s and traditional and Roth IRAs. Money inside these accounts grows tax-deferred or tax-free. That means you don’t have to pay any capital gains when you sell investments in the account.

With 401(k)s and traditional IRAs, you’ll pay income tax on the withdrawals you make in retirement. But with Roth accounts, your withdrawals are tax-free.

“Traditional IRAs can help you lower your tax bill and are great for individuals who earn too much money to contribute directly to a Roth IRA,” says Brian Walsh, CFP^® and Head of Advice & Planning at SoFi. “Higher-income earners might not get to deduct contributions from their taxes now, but they can take advantage of tax-deferred growth between now and retirement.”

•   Take advantage of the home exclusion: If you’re selling your primary residence at a profit, you may qualify to exclude up to $250,000 in capital gains if you’re a single filer, and $500,000 if you’re married and filing jointly. In general, to be eligible for this exclusion, you must have owned and used your home as your primary residence for a period that totals at least two years out of the five years prior to that date on which you sell the home.

•   Consider tax-loss harvesting: You’ve already learned that you can use capital losses to offset capital gains. Doing so strategically is known as tax-loss harvesting, and it may be a strategy worth considering as you prepare for tax season.

For example, you may sell certain investments at a loss when you know you are going to incur a large capital gains tax bill. Also, if your capital losses are greater than your gain, you may be able to offset up to $3,000 worth of income. If you’re unable to use your losses in a given year, you can roll them over to the next.

Strategies like tax-loss harvesting can be complicated, and it may be worth speaking with a tax professional to avoid making any tax filing mistakes.

Do You Pay State Taxes on Capital Gains?

In addition to federal capital gains tax, you may owe state tax as well. Not all states charge capital gains, but many (currently more than 40) do. Visit your state government website to find out if yours is one of those that does and what the current rates are.

The Takeaway

When you sell an investment you’ve held for more than a year, you may owe long-term capital gains tax. The rate you pay can vary with filing status and income, ranging from 0% to 15% to 20%. With a deeper understanding of how these taxes work, you can appropriately pay these taxes and possibly offset some of the amount. This can help you manage your money more effectively.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How much tax do I pay on long-term capital gains?

Depending on your income and filing status, you’ll pay 0%, 15%, or 20% in federal long-term capital gains taxes. You may also owe state capital gains taxes, depending on where you live.

What qualifies as long-term capital gains?

Long-term gains are money you have made from the sale of assets you’ve owned for longer than a year. It may apply to investments, real estate, and collectibles, among other assets.

How do I avoid paying capital gains tax?

You don’t have to pay capital gains taxes on the sale of investments inside of tax-advantaged accounts, such as 401(k)s and IRAs. You may also avoid paying capital gains tax if you offset your gains with capital losses.

What is a long-term capital gain example?

An example of a long-term capital gain might be the sale of a rental property that an investor has owned for 10 years. Say that investor bought the property for $200,000 and sold it for $325,000. That investment would have a capital gain of $125,000. Because the asset was held for more than a year, it qualifies as a long-term gain.

photo credit: iStock/LordHenriVoton
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SORL-Q425-068

Sometimes student loan debt can start to feel like it’s slowing you down. Maybe the interest rate is too high, you’re not happy with your loan terms, or you’re frustrated with the lender’s customer service. If so, you have the right to look for a new lender and transfer your debt to a different company.

However, you can’t simply ask a new lender to take on your debt with the same terms. To transfer your student loan, you generally need to take out a new loan with a new lender or servicer. The process of switching will be different depending on whether your student loans are private or federal, and it may involve consolidating the loan or refinancing.

If you’re thinking about a loan transfer, keep in mind that there’s no guarantee you’ll end up in a more favorable situation just by switching lenders. Here’s what you need to know about student loan transfers.

How Do I Transfer Student Loans to Another Private Lender?

If you have private student loans, the main way to transfer your debt to another lender is to refinance your loans. This involves taking out a new loan with a different lender and using it to pay off your current student loans. Moving forward, you only make payments on your new loan to your new lender.

If you have multiple private student loans, refinancing can simplify repayment by giving you only one monthly payment to manage. And, if your financial picture has improved since you took out your original private student loans, you may be able to qualify for a lower interest rate. Another perk of refinancing is the ability to lengthen your repayment timeline to reduce your monthly payment amount. Keep in mind, though, that a longer repayment period will generally end up costing you more in the long run.

You’ll need to meet certain criteria to be eligible for private student loan transfer via student loan refinancing. Most lenders have a minimum income threshold as well as a minimum credit score (often in the upper 600s). If you don’t meet the income or credit requirements, you may be able to qualify by adding a cosigner.

Many lenders offer prequalification, which lets you see what type of rates and terms you may be able to qualify for without impacting your credit score. To find the loan with the best rate, it can be a good idea to shop around and compare lenders through prequalifying. Once you find a lender you want to work with, you’ll need to officially apply for the student loan refinance.

Can I Transfer My Sallie Mae Loans to Another Lender?

Currently, Sallie Mae only offers private student loans. Prior to 2014, however, the lender serviced federal student loans. If you want to refinance a Sallie Mae loan you took out before 2014, you’ll need to check whether it’s federal or private before moving forward.

If you took out a Sallie Mae loan after 2014, it’s a private student loan, and you can refinance the loan with another private lender. This might be a good idea if you can qualify for a lower interest rate.

What’s the Difference Between a Lender and a Loan Servicer?

While the terms lender and loan servicer are often used interchangeably, they are not the same thing. Here’s a look at how they differ.

Student Loan Lender

A lender is an institution or company that originates and funds the student loan. In other words, they’re the one lending you the money. For example, if you apply for a federal student loan, the federal government is your lender. If you apply for a private student loan, you can choose between a number of private lenders.

A Student Loan Servicer

A federal student loan servicer is the middleman between you and the federal government (the lender). Servicers handle your student loan billing and payments, and they keep track of whether you pay your loans on time. They will help you if you’re having trouble with your repayment plan or need to change your address or other personal information.

You do not get to pick your servicer. During the course of your federal student loan, your servicer might change a few times. For example, if you had a loan with Great Lakes, it was likely transferred to Nelnet some time between March 2022 and June 2023. You’ll typically get notified of a student loan transfer two two weeks prior to your transfer date.

If you have a federal student loan and you’re not sure who your servicer is, you can log in to your account on StudentAid.gov to find out.

Can I Change My Student Loan Servicer?

You can’t change your federal student loan servicer directly. However, if you’re willing to do some legwork, there are two main ways to move your federal student debt to a new servicer or lender.

If you want to keep your federal loan status but switch to a different loan servicer, you can transfer your loans by consolidating them into a Direct Consolidation Loan. If your main objective is to save on interest, you may want to look into refinancing your student loans with a private lender. Read below to learn more about each scenario.

What About Consolidating My Student Loans?

One way to switch loan servicers is to consolidate your federal student loan(s). This allows you to transfer the debt to a different servicer but keep your federal student loan status, since the lender will still be the federal government.

The consolidation process lets you combine several federal student loans into a single, easier-to-manage Direct Consolidation Loan. While it does not reduce your interest rate, it can lower your payment by extending the term. The downside is that the extended term will mean you pay more in interest over time.

Since not all federal loans have the same interest rate, the interest rate on a new Direct Consolidation Loan will be a weighted average based on your current loan amounts and interest rates. Any unpaid interest is added to your principal balance. The combined amount will be your new loan’s principal balance. You’ll then pay interest on the new principal balance.

Consolidation can be a good option if you are unhappy with your servicer or have several servicers and want to simplify your student debt by having only one payment.

If you have Federal Family Education Program or Parent PLUS loans, you need to consolidate to be eligible for income-driven repayment, public service loan forgiveness, and other relief programs.

You can complete a consolidation loan application at StudentAid.gov.

What About Student Loan Refinancing?

Another way to change your federal student loan servicer is to refinance your federal student loans with a private lender. If you also have private student loans, you can refinance them together with federal loans, giving you a single loan payment each month.

Generally, refinancing federal student loans may make sense if you can qualify for a lower interest rate. If you have higher-interest federal student loans, such as graduate PLUS loans or Direct Unsubsidized Loans, you may be able to get a lower rate by refinancing. To qualify for the best rates on a private student refinance, you generally need to have strong financials (or can recruit a cosigner who does).

It’s important to note that refinancing federal student loans with a private lender means losing federal protections, such as income-driven repayment plans, federal deferment and forbearance programs, and loan forgiveness options like Public Service Loan Forgiveness (PSLF).

If you’re interested in refinancing your federal loans, it’s a good idea to review offers from multiple lenders to find the best deal. Many private lenders will allow you to prequalify via a soft credit check so you can see your likely new interest rate without negatively impacting your credit score.

What About Transferring My Student Loan Balance to a Credit Card?

You generally can’t pay federal student loans with a credit card. If you have private loans, however, another option for student loan transfer is to move the balance onto a credit card and pay your monthly bills there. Some credit card issuers allow student transfers, but not all.

Generally speaking, this tactic only makes sense if you can qualify for a card with a 0% introductory rate and can pay off the entire balance before that promotional period expires (often between 12 and 21 months). Otherwise, you could be left paying even more in interest than you would with the original loan.

To see if you can manage this repayment schedule, simply divide your loan balance by the number of months you would need to pay it off before interest applies. Also check to make sure the credit card offers a high enough credit limit to accommodate your loan, and find out if there are any transfer fees.

If you decide it’s a good deal and are confident you can make it work, you would apply for the credit card and, once approved, give your credit card account details to your loan servicer. Your credit card issuer would then pay off your private student loan debt and move the balance to your credit card account. Moving forward, you only make payments to the credit card issuer.

Is It Possible to Transfer Student Loans From Parent to Student?

The federal government does not offer a way to transfer Parent PLUS loans to the child. However, if you’re looking to have your Parent PLUS loans transferred to your child, refinancing the loans with a private lender allows you to do that.

To make this type of loan transfer, you’ll first need to identify Parent PLUS refinance lenders that allow loan transfers. After that, your child may want to prequalify with a few of these lenders to see where they can get the best rate.

If your child meets the lender’s qualifications on their own, you can fully transfer the loan to them. If they don’t, you can serve as a cosigner on the refinanced loan and work with them to meet the lender’s cosigner release requirements. Many lenders allow cosigner release after a set number of successful payments.

The Takeaway

If you’re interested in transferring your student loans to a new servicer or lender, you have some options. If you have federal student loans, you can consolidate your loans to get a different servicer. If you have federal, private, or a mix of both types of student loans, another option for loan transfer is to refinance your loans with a private lender.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What happens if my student loans are transferred to a new servicer?

If your federal student loans are transferred to a new loan servicer, you will be notified at least two weeks in advance and provided with the new servicer’s name and contact information, according to the Education Department. The new servicer will take over the loan, and they should reach out to you when the loan transfer is complete. At that point, they will handle the billing, payments, and customer service for your student loans.

Can I stop my student loans from being transferred?

Generally, you cannot stop your federal loans from being transferred to a new loan servicer. Federal loans are owned by the Education Department, which assigns them to a servicer. If the contract with that servicer ends, your loans will be transferred to a new loan servicer.

Can a student loan transfer lower my payments?

Transferring your student loans might lower your monthly payments if you refinance the loans and qualify for a lower interest rate. You could also lower your payments by extending the payment term through refinancing — or with a federal Direct Consolidation Loan — but a longer loan term will cost you more in interest over the life of the loan. Be aware that refinancing federal student loans into private loans makes them ineligible for federal benefits like income-driven repayment and forgiveness.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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