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Although the Biden-Harris Administration’s plan for widespread student loan forgiveness was ultimately shot down by the Supreme Court, all is not lost for the millions of borrowers hoping to have their loans canceled.

For instance, the administration established a new income-driven repayment plan known as the Saving on a Valuable Education (SAVE) plan. This program replaces another IDR plan — Revised Pay As You Earn (REPAYE) — in an attempt to improve some of its shortcomings and provide greater relief to struggling borrowers. SAVE extends the repayment timeline to 20-25 years and forgives any remaining balance after that period.

That said, student loan forgiveness options may be more limited for borrowers with private loans, who owe an average of $54,921 each.

Student Loan Breaks for Many but Not All

The Biden administration and the U.S. Department of Education have forgiven a large amount student loan debt so far via targeted relief efforts. It canceled $9.5 billion in student loans in 2021, mainly for federal student loan borrowers who are public servants or graduates of now-defunct schools. The administration also canceled federal student loans for borrowers who were defrauded by their institutions and who have total and permanent disabilities.

In August 2022, President Joe Biden announced a larger initiative to forgive up to $20,000 in federal student loans for those who met certain income requirements. However, the Supreme Court deemed that the President didn’t have constitutional power to implement such a plan. Either way, private student loan borrowers were not included in any of the relief.

Recommended: A Guide to Private Student Loans

Can Private Student Loans Be Forgiven?

Do lenders forgive private student loans? Unfortunately, that almost never happens.

However, many do offer student loan deferment or forbearance options for borrowers facing financial hardship. Interest typically accrues during these periods, regardless of whether the borrower is making payments.

Read your loan contract or disclosure statement for your loan, which contains information about terms, rates, fees, and penalties. Here, you’ll find information related to any hardship programs offered by the lender. You can also reach out directly and ask about your options.

Whatever you do, don’t miss a payment. Contact your lender immediately if you’re facing a hardship that will prevent you from making payments on time and in full. After a default on a private student loan, which can happen quickly, private lenders may hire a collection agency or file a lawsuit.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Private Student Loan Debt Relief Options

Don’t assume that if you’re having trouble making your private student loan payments you don’t have any recourse. Here are a few moves you can consider.

1. Refinance Your Private Student Loans

Refinancing your student loans can offer several benefits. If you have a good credit history and solid income, or a cosigner, you may be able to qualify for a lower interest rate, reducing your monthly payments and the total interest you pay over the life of the loan.

Or you may be able to lengthen the term of your loan and decrease your monthly payments (but elongating the repayment term will usually increase the total interest paid). Give this student loan refinancing calculator a try.
When you refinance, the lender will pay off your old loans and issue you a new loan with a new rate and terms and with one payment.

A few lenders will refinance both federal and private loans. You’ll also be given a choice of a fixed or variable rate.

Even if interest rates rise, variable rates often save money over the long term.

Do your homework:

•  Be sure you’re getting the lowest rate possible with terms that fit your short- and long-term needs.

•  Although student loan refinancing almost never comes with any closing costs, it’s a good idea to find out if there are any fees involved. Keep in mind that you can refinance more than once.

•  If you plan to refinance any federal student loans, know that doing so will permanently forfeit all federal benefits and protections, including income-driven repayment plans, federal deferment and forbearance options, and forgiveness programs such as Public Service Loan Forgiveness (PSLF).

•  Consider lenders that initially do a soft credit pull before you actually apply with them to refinance your student loan. That way, shopping for interest rates will not affect your credit.

Recommended: Soft vs Hard Credit Inquiry: What You Need to Know

2. Talk to Your Lender

Talk to your lender about your options to repay your student debt. You aren’t the first (and you won’t be the last) to ask for help, and many private lenders offer some type of loan modification for borrowers who are financially struggling.

You may be able to negotiate a lower interest rate or a lower payment over a longer term, or set up a period during which you can make interest-only payments.

Be ready to answer questions about why you’ve fallen behind, what other debts you’re paying, and about your income prospects.

Always communicate with your lender to avoid student loan forgiveness scams. Some private companies that falsely offer debt relief may try to ask you to pay monthly costs or upfront fees, ask you for your identification, or promise immediate loan forgiveness. If you think you’re the victim of suspicious activity, contact the Federal Trade Commission.

3. Consider a Payment Pause

Some private lenders offer deferment or forbearance, which will allow you to postpone payments.

•  Deferment is sometimes available to borrowers who are planning to go back to school or who are entering military service.

•  Forbearance is typically available for those who have had an unexpected hardship that makes repayment difficult, such as an illness or a job loss.

Interest will still accrue during these private loan payment breaks.

As with federal loans, your employer may assist you with your private loans, especially if your skills are in demand. Also, many industries and professional associations offer student loan repayment assistance for firefighters, teachers, lawyers, and health care workers.

The Takeaway

Private student loan forgiveness is rare and has not been included in any sweeping moves to cancel student loan debt or provide relief. Borrowers of private student loans may be able to refinance and get a better rate or work with their lender if they’re struggling.

SoFi refinances both federal and private student loans. There is no cost or prepayment penalty. Deferment and forbearance plans are available.

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.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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As tough as it can be to write a college admissions essay, a student has time to prepare and edit the work before submission. When it comes to an interview, there’s no pause button to press when an applicant messes up an answer and wants to edit it. Still, there are ways to recover and turn the interview around. That’s why preparing for a college admissions interview is vital to success.

Here are things to get a head start on, including common college interview questions, before taking the hot seat.

How Important Is a College Interview?

Before deciding whether or not an interview is worth the time and effort, students should know how important they are to the admissions process. The importance of the interview depends on whether it’s informational or evaluative.

Not all colleges will refer to the interview as “informational” or “evaluative.” Students should pay attention to the wording their schools use for interviews. If the school “strongly encourages” or “highly recommends” that a student schedule an interview, it may be an evaluative interview and an important piece of the application process.

Informational Interviews

Informational interviews are usually optional and mostly for the benefit of the student. These generally exist to allow students to learn more about the school and to show the college that they’re seriously interested in attending.

It’s not required for admission to book an informational interview, but it can help a student demonstrate a strong desire to attend the school and give the school a more multidimensional view of the student.

Informational interviews can also help to figure out which school is the best fit. Doing an informational interview gives students a chance to ask any questions they may have about the school and could give them a more complete picture of what life on campus looks like.

Evaluative Interviews

Evaluative interviews are usually conducted by selective colleges and universities such as most Ivy League institutions, and can affect admission. During an evaluative interview, a write-up of the students’ responses will be added to their application materials.

Whether the interview is evaluative or informational, the following college interview tips apply.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Booking and Practicing

These days, many U.S. schools don’t require interviews in the admissions process. Some schools don’t do them at all. Students who are looking to participate in interviews should check with the schools they’re applying for and see which ones are willing to conduct interviews. This is the first step in the process.

After students have determined schools where they can interview, they will likely need to make an appointment. The most common time to interview is during the fall of one’s senior year, but sometimes a student will be able to interview as early as the summer before senior year or as late as February of senior year. This will vary among schools, so students will want to check with each school individually to see when they’re booking admissions interviews.

Applicants should start preparing as far in advance as possible and will probably want to practice with friends, family members, or even teachers. They should give themselves enough time to schedule these practice interviews and incorporate the feedback given in between each meeting. The amount of time needed to prepare will vary from student to student.

More About Preparing

Now that the process is explained and students are aware of when their interview will take place, it’s time for preparation. Going into an interview without preparation is not recommended and could affect performance. Here are some tips on how students can prepare for college interviews.

What to Take With You

Show up with just a pen and paper? Transcripts? Applicants don’t need to stress too much about this. Some schools provide students with a list of things to bring with them, and if they don’t, there are some commonly recommended items to take just in case:

•   Two copies of one’s resume
•   SAT/ACT scores
•   A list of AP classes the student will take in spring semester
•   A copy of the completed application
•   A notebook and a pen
•   Questions for the interviewer about the college

What Questions Will You Be Asked?

Another important piece of preparing for an interview is finding out what questions are commonly asked during college interviews. Once students find out what questions they can expect to be asked, they’ll be able to rehearse their answers, making the actual interview less intimidating.

According to the National Association for College Admission Counseling , these are some college interview questions that students should be prepared to answer:

•   Tell us about yourself.
•   What are your favorite classes?
•   What extracurricular activities have you been involved in?
•   What special programs are you interested in?
•   Why are you considering our college?

The interviewer will be trying to get to know the prospective student and understand why he or she is interested in the school. If students had a challenging academic year as evidenced with grades on record, they should be ready to discuss that as well.

Questions may vary from one school to the next, but this list can help students get started and have a good idea of the types of questions they’ll be asked.

What Questions Should You Ask?

An interview does not involve questions coming from one side only; applicants will be expected to ask the interviewer questions as well. Showing up with questions ready to go will show the interviewer that the student has done research and is genuinely interested in attending the school.

The National Association for College Admission Counseling also recommends students ask questions during interviews. It includes the following:

•   What is the admissions process for the school?
•   Are there opportunities to participate in special programs like study abroad and first-year seminars?
•   What social options are available?
•   What are some of the school traditions?
•   Can you tell me about dorm life?

Students can ask questions about their prospective majors, campus life, class environments, and anything they’d like that will help bring them closer to deciding on the right college. They should have a list of their questions written down before the interview.

Rehearsing the Interview

The last step of preparing for an interview is to practice it with others. Interviews are like conversations, and there’s no way to predict exactly how it will go. Practicing with a variety of partners will help students feel more confident in their answers.

After practicing the interview, students should ask their partners for feedback. This will give them concrete ideas for what they need to practice more and where they can improve.

It can also be beneficial to schedule the interview for their top choice school last, if possible. This can give them time to interview at other schools first, providing more opportunities for practice and improvement.

Interviews can be stressful, so students can prepare by getting a good night’s sleep and talking to someone for help — essentially, employing strategies and habits that they probably used to get this far in the college application process.

Financing Your College Education

Getting into college is a feat in and of itself, but getting accepted is just one piece of the puzzle. If students don’t know how to finance college, they won’t be able to attend.

We’ll go over the options so students can start their financial planning now.

Federal Aid

Every student should fill out the FAFSA®, the Free Application for Federal Student Aid, to determine eligibility for federal aid for school. Eligibility for undergraduates is usually based on the parents’ income. If students are eligible for aid, there are a couple of types they may receive.

Federal aid can come in the form of grants or loans. Grants don’t need to be repaid, whereas loans do. Federal loans usually come with benefits that private loans don’t, such as income-driven payments and lower fixed rates. It’s recommended that students take federal aid before turning to private loans.


💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too.

Scholarships

Generally, there are lots of scholarships available to students. Scholarships can be need-based or merit-based. The eligibility requirements vary for each scholarship. They can be given out by colleges, corporations, or local community organizations. Students should see what resources their school has available in terms of scholarships. Often schools have a scholarship office or information about scholarships at their financial aid office.

Private Loans

Private student loans are another way that students can help fund their college experience. Each lender will have its own set of terms, including the interest rate and repayment methods. Students should make sure to do thorough research on the institution’s terms before choosing to take out a private loan.

There are many ways to finance a college education. Students who start their research early will be better equipped to find the right financial plan for them.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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The idea of never making another student loan payment may be enticing enough to make your lender an offer. But is it possible to settle student loan debt for less than you owe?

In most cases, probably not. However, there are ways to get a student loan settlement if you’re in dire circumstances — though not everyone gets the chance and the risks might outweigh the rewards. We’ll walk you through some options.

What Is a Student Loan Settlement?

Let’s start at square one. A student loan settlement is settling your debt for less than what you owe on it and then making affordable repayments.

Settlements probably aren’t an option for people who make on-time, minimum payments. A lender isn’t likely to accept a settlement for less than what you owe if they have reason to believe you will eventually be able to pay back the entirety of the loan.

Typically, you can consider settlement if your student loans are in default. Once a federal student loan is in default, the entire balance comes due immediately, unlike loans in good standing, where you’ll have a minimum payment due each month.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Federal Student Loan Settlement

If you have student loans that you’re looking to settle, you first need to make sure you qualify to do so. You’ll need to currently be in default — which means that, if it hasn’t already, your loan will go to collections or a debt collector.

A settlement means you’re making a deal to pay off your loan for less than what you borrowed. This is different from student loan forgiveness, which cancels your loans under certain circumstances.

For a federal student loan settlement, there are three potential options to exit default:

1.    Waiver of fees. You’re now only eligible for the principal balance and interest, not the fees.

2.    Half interest and fees waived. All your fees are waived, plus 50% of the interest. You’re only responsible for the other 50% of interest and the principal balance.

3.    10% of principal balance and fees waived. You’re responsible for 90% of the principal balance and remaining interest.

Which option you choose will depend on the type of loans you have, your financial situation, and your loan servicer. Most of the time, new loan balances are due within a single fiscal year after the new settlement agreement. New terms will vary, but keep in mind that your new balance must be paid in full by the new deadline.

Settling Private Student Loans

If you have private student loans that you want to settle, your options are a bit different than federal loans. Your settlement will depend on your lender and what terms they are willing to accept. Each private lender is different, so you will have to contact them directly and ask their terms for settlement — if they accept settlements at all.

Alternatives to Student Loan Settlements

A student loan settlement is not without consequences. Your credit will likely take a hit when the loan is in default and once it is settled. But if your loans aren’t in default, there may still be other ways for you to lower your monthly payments.

1. Income-driven repayment plans (IDR)

For federal student loans, you can see if you qualify for an income-driven repayment plan. There are four options to choose from: Income-Based Repayment, Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE) Plan, and Income-Contingent Repayment, among others. They all vary based on the details of your financial situation, like your income and family size.

The Department of Education recently started a new IDR program called SAVE. With this program, borrowers can pay as little as 10% of their discretionary income toward their monthly student loan payment, and their loans will be discharged after 20 years for undergraduate loans, and 25 years for graduate loans. Starting in July 2024, eligible borrowers in the SAVE plan will be able to pay 5% of their discretionary income toward their monthly federal loan payments and their loans will be forgiven in as little as 10 years, depending on their total loan balance.

2. Student loan forgiveness programs

There are plenty of ways federal student loans can be forgiven — if you qualify. With forgiveness, your loans are canceled, and you don’t have to pay off a balance, as you would with a settlement.

If you work in public service, education, healthcare, and some other sectors, you may be eligible for federal student loan forgiveness. To take advantage of certain federal programs, like Public Student Loan Forgiveness, you need to make 120 qualifying monthly payments and work for a qualifying employer to be eligible.

3. Discharging a loan

Getting your loan discharged isn’t the same as forgiveness, but it does mean your loan may get partially or completely canceled. You may qualify if you’re permanently disabled, your school closed, or, possibly, you file for bankruptcy. If you’re a veteran with a service-related disability, you receive Social Security Disability Insurance, or your doctor has diagnosed your disability, you might qualify to have your loan discharged.

If you have federal loans, and you feel your school “misled” you, promising jobs or certain salaries after graduation, you may qualify to apply for Borrower Defense Discharge through the Department of Education. As of July 2023, the Biden administration has approved $14.7 billion in relief for 1.1 million borrowers who claim their colleges took advantage of them or the schools closed abruptly. In August 2023, a federal court issued an injunction against the borrower defense discharge program, delaying payments, but borrowers can still submit an application.

Student Loan Refinancing

When you have a few different student loans, it can be overwhelming to pay them all on time every month. And with varying interest rates, it can get confusing.

Refinancing your student loans replaces all of your student loans with one new one. You get new terms and a new interest rate. Your new interest rate is usually determined by your credit score. If you’re having trouble meeting the minimum requirements, you could consider trying to get a cosigner.

Refinancing is a good option if you’re struggling to make your payments on time every month. Refinancing may help you lower payments and possibly your interest rate, depending on your terms. (You may pay more interest over the life of the loan if you refinance with an extended term.) Check out our student loan refinance calculator to get an idea of how refinancing could help your student debt situation.

It’s important to note that refinancing with a private lender means you would lose out on any federal benefits, including access to income-driven repayment programs or potential student loan forgiveness.

The Takeaway

While student loan settlements are rare — especially for federal loans — there are other options for borrowers who are struggling to pay their loans. If you have federal loans, you can apply for an income-driven repayment program and in some extreme cases, you may qualify for your loan to be discharged. Another option is student loan refinancing, though as mentioned above, if you refinance your federal loans you’ll lose access to certain federal benefits.

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.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Since private student loans are held by a private bank or lender, you can’t refinance private student loans to federal loans.

The reverse, however, is possible. You can refinance private and federal student loans into a new private student loan with a new, ideally lower, interest rate. When you refinance federal student loans, it’s important to understand you lose access to federal benefits and protections.

Here’s what to know about why you can’t convert private student loans to federal loans, how you can combine both into a new refinanced loan, and how to make the choice that’s right for you.

Transferring Private Student Loans to Federal Loans

It isn’t possible to refinance private student loans to federal loans since private loans can only be held and owned by private financial institutions. Your federal student loans, on the other hand, can be converted into a private loan.

Although private and federal loans serve the same purpose — to finance your education — they differ in significant ways. One of the biggest distinctions is that private loans are not eligible for federal programs and benefits.

For example, federal student loan mandates during the COVID-19 pandemic offered automatic protection for federal borrowers. All federal student loans were put on administrative forbearance so that loan payments were paused without penalty. Also, borrowers weren’t responsible for any interest that accrued during this time.

While the payment pause came to an end in fall 2023, federal student loans are eligible for a number of other federal benefits, including income-driven repayment plans, deferment options, and forgiveness programs like Public Service Loan Forgiveness and Teacher Loan Forgiveness.

Since private student loans don’t come from the Department of Education, however, they do not qualify for these federal programs — and there’s no way to make them eligible.

Recommended: Types of Federal Student Loans

How to Combine Private and Federal Student Loans

While there’s no way you can refinance private student loans to federal loans, the reverse is possible: You can convert a federal loan to a private loan to combine your federal and private student debt into a new private loan.

Refinancing

You can combine federal and private student debt by refinancing your federal student loans into a private loan. Refinancing is offered by a private lender and requires a credit check. This repayment option lets you refinance existing federal loans, private student loans, or a combination of both into a new private student loan.

The new refinancing lender pays your original loan(s) in full and creates one refinanced student loan for the total amount it paid on your behalf. Over time, you’ll repay your new lender your principal refinance amount, plus interest charges.

Overall, a student loan refinance can help you combine multiple loans into a single loan at a new rate and potentially better terms. It also results in one monthly payment. Depending on your credit score and other qualifying factors, it might help you access a lower interest rate.

Be aware that since a refinanced federal loan is no longer a part of the federal student loan system, you’re giving up federal benefits and protections if you refinance a federal student loan.

Recommended: Guide to Student Loan Refinancing

Consolidating

Federal student loans can be combined, or consolidated, through the federal Direct Loan program. When you consolidate your federal loans, they are combined into a single new loan with a new interest rate that’s an average of all of your existing federal loan rates, rounded up to the nearest eighth of a percent.

Some reasons to consolidate your federal loans include simplifying your payments and qualifying for federal student loan programs such as income-driven repayment plans or Public Service Loan Forgiveness (if your existing federal loans weren’t eligible for these programs to begin with).

Private loans are not eligible for federal loan consolidation. As mentioned earlier, you can only combine federal and private student loans together when you refinance your loans into a new private loan.

Benefits of Federal Student Loans

Although converting your federal student loans into a private loan might have its advantages, there are serious caveats to consider before moving forward. Ultimately, refinancing federal loans through a private lender means you’ll lose access to valuable federal benefits and protections.

Debt Forgiveness

A major benefit that federal student loans offer, compared to private student loans, is access to student debt forgiveness and cancellation. Depending on your personal situation, you might be able to have a large portion of your federal student debt forgiven.

Some programs offered for federal loans include:

•  Public Service Loan Forgiveness (PSLF). Borrowers who work full-time for a government entity or not-for-profit organization might be eligible for loan forgiveness. While working for a qualified employer, you must enroll in an income-driven repayment plan and make 120 qualifying payments toward your federal loans. Afterward, your remaining federal loan balance is forgiven.

•  Teacher Loan Forgiveness (TLF). Under TLF, educators who work full-time at an approved low-income school or service agency can earn up to $17,500 in forgiveness. You must agree to a five-year service contract and meet other requirements.

•  Perkins Loan Cancellation. If you have eligible Perkins Loans, you might be eligible for loan cancellation or discharge, depending on your employment service or unique circumstances.

Income-Driven Repayment

Federal student loan borrowers who are struggling to afford their standard 10-year monthly payments can explore one of the Department of Education’s income-driven repayment (IDR) plans.

There are four types of income-driven repayment:

•  Pay As You Earn (PAYE)

•  Saving on a Valuable Education (SAVE)

•  Income-Based Repayment (IBR)

•  Income-Contingent Repayment (ICR)

Each repayment plan calculates your monthly payment based on a percentage of your discretionary income and your family size. Some borrowers under an IDR plan may qualify for a $0 per month payment. Most of the plans offer a longer repayment period of 20 or 25 years, though the new SAVE plan will offer a 10-year term for borrowers who took out $12,000 or less starting in July 2024. After completing your repayment term, your remaining eligible federal loan balance is forgiven.

Understanding how income-based repayment works can help you gauge whether you’re willing to relinquish federal loan benefits for a private refinance loan.

Guaranteed Postponement

You might suddenly be hit with financial hardship, like being temporarily unemployed or experiencing an accident that inhibits your ability to make payments. In this stressful situation, federal student loans provide the option to request payment deferment or forbearance.

These federal protections pause your federal student loan payment requirement without penalty. During this time, interest still accrues and is added to your principal balance.

You’re ultimately responsible for repaying it back, as well as any interest that capitalizes when payments resume. However, this guaranteed postponement offers financial relief during difficult times.

Some private loans may offer deferment or forbearance options during times of financial hardship, but the options vary by lender.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

How Private and Federal Student Loans Differ

To decide whether refinancing your federal loans into a private loan makes sense for you, it’s important to know how private student loans vs. federal student loans differ.

Recommended: Private vs. Federal Student Loans

Student Loan Refinancing With SoFi

If you have private student loans, refinancing can be advantageous if you qualify for a lower interest rate that reduces your overall education debt. Use a student loan refinancing calculator to estimate your savings.

Before refinancing a federal student loan, decide whether you might need to leverage government benefits, like income-driven repayment or loan forgiveness programs. You’ll lose these useful benefits by refinancing all of your federal loans.

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

Is it possible to change private student loans to federal?

No, there is no way to change private student loans to federal loans. However, you can refinance your private and federal loans together, ideally to qualify for a lower rate or better loan terms. If you go this route, you will be changing your federal student loan(s) into a private loan.

Is it possible to change federal student loans to private?

Yes, you can change a federal student loan to a private student loan through refinancing. A private refinance lender will pay off your original federal loan, and you’ll have to make payments to your new private lender for the principal balance, plus interest. Changing your federal student loans to a private loan, however, will mean you lose access to federal repayment plans, forgiveness programs, and other protections.

How can you combine private and federal student loans?

You can combine private student loans and federal student loans with a refinance student loan. Student loan refinancing is provided by a private lender, so any federal loans you refinance will become private and you’ll lose the government benefits and protections you had under the federal loan system.

Photo credit: iStock/YayaErnst

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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The average student loan borrower takes out $29,100 to pay for college, according to College Board’s Trends in Student Aid 2022 report. In 2022, 16% of borrowers had their student loans in default. The amount of federal loans in default represents 10% of the total federal student loan portfolio, or $146.8 billion out of $1.48 trillion.

Federal student loan default, which occurs after 270 days of missed payments, is most common among borrowers with low balances. The three-year default rate for borrowers who owe $5,000 or less is 24%, while it’s just 7% among those who owe $40,000 or more. Overall, the average balance of defaulted student loans is $21,600.

The History and Importance of the Default Rate

What’s known as the three-year default rate is a highly watched number because it’s the figure the U.S. Department of Education uses to determine if colleges and universities qualify to receive federal student aid. If a school’s default rate exceeds a certain benchmark three years in a row, it could lose eligibility for Title IV funding.

The student loan default rates have generally trended down over the last two decades. In March 2020, the Department of Education paused collections on most student loans in default. It’s also offering a Fresh Start program that allows borrowers to easily get their loans out of default and back into good standing.

Recommended: 7 Tips to Lower Your Student Loan Payments

What Is the Average Student Loan Default Period?

While the federal government focuses on the three-year student loan default rate, the rate may be higher over the life of the loan. For instance, EducationData.org finds that 25% of borrowers default within five years of when their repayment starts.

Students who were enrolled in private for-profit colleges are the most likely to have student loans in default, data shows.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

The Difference Between Defaulting on a Loan and Being Delinquent

Borrowers participating in the Federal Direct Loan program or the Federal Family Education Loan (FFEL) program are considered in default if they miss nine months or 270 days of payments. Borrowers can face a number of serious consequences if they default on a loan, including losing the opportunity to defer payments or choose a repayment plan.

It may also damage your credit, and your tax refunds may be withheld and applied to what you owe on your loans. The government could even garnish a portion of your wages to apply to your loan. Finally, your loan holder can sue you, and if that’s the case, you may be responsible for the court fees.

With a delinquency, you still have time to start making payments again and restore your relationship with your lender. You’re considered delinquent on federal student loans the day after you miss your first payment, and you’ll remain delinquent until you resume payments and make up the past due amount.

If it’s been 90 days since your last payment, the lender can report you to credit agencies, and those missed loan payments can go on your credit report, which can affect your ability to borrow in the future. And with a bad credit report, you may have trouble getting credit cards, home loans, and even arranging for utilities or homeowner’s insurance.

What Options are Available to Make My Loans More Affordable?

To avoid becoming part of the student loan default rates, it’s important to take action. If you are delinquent on your student loans or think you may be heading that way, you can seek deferment of your payments, or forbearance, which is a federal benefit to stop making payments for a period of time. However interest may still accrue. You could also choose a federal income-based repayment program that bases your monthly payment on your income and family size.

Another option is to refinance your student loans with a private lender. With student loan refinancing, you may be able to get a lower interest rate or more favorable terms to help reduce your monthly payments. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

Want to see how much you might save? You can use a student loan refinance calculator to see if refinancing makes sense to you.

Keep in mind that if you need access to federal protections and programs, such as income-driven repayment programs, refinancing federal student loans likely wouldn’t make sense for you. That’s because when you refinance federal loans, they become ineligible for these special benefits.

As you’re pondering your options for refinancing, a student loan refinancing guide can be helpful for walking you through the process.

If, after doing your research, you decide that now is the right time for refinancing, you’ll want to shop around for the best rates and terms. SoFi offers loans for student loan refinancing with low fixed or variable rates, flexible terms, and no fees. And you can find out if you prequalify in just two minutes.

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.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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