SoFi

The reality is that, much like that red wine stain on the rug, Sallie Mae student loans aren’t likely to evaporate into thin air. That’s because Sallie Mae is a private lender now.

And despite what you may have heard, there is currently no such thing as private student loan forgiveness.

Forgiveness is limited to federal education loans, and even then, the options are few. There are federal student loan forgiveness programs for those who go into public service or teaching. But other than that, it’s extremely difficult to cancel student loans.

Can Older Sallie Mae Loans Be Forgiven?

If you’re confused about whether your Sallie Mae loans are private or federal, it may be because the company has evolved over the years.

Though Sallie Mae, aka SLM Corp., no longer services federal loans, that wasn’t always the case.

Sallie Mae was created in 1972 as the Student Loan Marketing Association, a government-sponsored enterprise that serviced federal education loans. Even though it became privatized in 2004, the company continued to service federal loans made under the Federal Family Education Loan (FFEL) Program until that program ended in 2010. Then, in 2014, Sallie Mae split into two companies: SLM Corp. and Navient Corp and shifted its federal student loans to Navient.

So, if you have an older loan — one that originated before 2014 — it may have been a federal loan that started out with Sallie Mae and then moved on to Navient. And if that’s the case, you may be able to apply for Sallie Mae loan forgiveness.

Applying can be complicated, and you may have to consolidate your loans into a Federal Direct Consolidation Loan as part of the process.

You can see if your old debt is a federal education loan by visiting the Federal Student Aid website. If it is, and you want to seek loan forgiveness, you’ll eventually make your application to the government.

Keep in mind that Navient shifted federal student loan accounts to Aidvantage, a division of Maximus Federal Services, after Navient cut ties with the Department of Education in late 2021.

You can contact your current student loan servicer for information on how to get started.

Recommended: How Do Student Loans Work? Guide to Student Loans

What If You Don’t Qualify for Loan Forgiveness?

If federal student loan forgiveness seems like a long shot for you, don’t despair — you also may want to look into deferment or forbearance. These strategies allow qualifying borrowers to temporarily reduce or stop their federal student loan payments. However, depending on the type of federal loan you have, interest may continue to accrue while payments are paused, which could increase the overall cost of the loan.

Looking for a more long-term solution? An income-based repayment plan can offer qualified applicants another way to lower federal student loan payments. The four options limit how much money you put towards student loans each month based on family size and discretionary income (the difference between your annual income and 150% of the poverty guideline for your family size and state of residence).

You can contact your loan servicer for assistance with federal loan repayment. If you don’t know who your servicer is, you can find out by visiting your Federal Student Aid dashboard or calling 800-433-3243.


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

Are There Alternatives to Private Student Loan Forgiveness?

Although there currently is no such thing as Sallie Mae private student loan forgiveness, there are alternatives available to borrowers struggling to manage their private loans.

Private lenders don’t offer income-driven repayment plans. But if you feel comfortable calling Sallie Mae (or any lender) directly, you could ask about other repayment plans they might offer or what ideas they might have for your situation. At the very least, it doesn’t hurt to learn more about your loans.

And some lenders, including Sallie Mae, offer deferment and forbearance for those who qualify.

The timeline and cost for each of these programs may vary by lender. Sallie Mae, for example, may require a “good faith payment” to go into forbearance. You may also be able to press pause on payments up to 48 months with a deferment specifically for returning to college, going to graduate school, entering into a law clerkship, and several other special circumstances. Something else to consider if you’re thinking about deferment or forbearance is that — just as with federal loans — even though the payments are paused, interest may continue to accrue. And this can increase the total cost of the loan.

Recommended: Private Student Loans Guide

Can You Refinance Sallie Mae Student Loans?

If you can’t make any headway with your current repayment plan, you can always look into refinancing student loans.

Though there are advantages to refinancing student loans, there are potential drawbacks to consider. For instance, if you refinance your federal loans through a private lender, you may give up some important benefits, such as access to federal repayment programs.

Sallie Mae doesn’t offer student loan consolidation and refinancing anymore, but you could potentially reduce your interest rate by refinancing your student loans with a different private lender, especially if you have a good credit history and strong potential earnings.

If you’re approved, the new lender will pay off your old loans and issue you one new student loan — hopefully with a lower interest rate. A lower rate can save money on interest payments over the life of the loan, provided that the loan term isn’t extended.

Though you can’t combine federal and private student loans through a federal loan consolidation program, some private lenders will refinance both.

You could extend your loan term if you’re hoping to make your monthly payments more manageable, or you could opt for a shorter loan term to try to get out of debt sooner.

Recommended: Student Loan Consolidation Rates: What to Expect

The Takeaway

Lender Sallie Mae used to offer federal student loans, and if you received one, you may be able to qualify for loan forgiveness. But federal student loan forgiveness can be hard to get — and if you have a private student loan through Sallie Mae, federal forgiveness is not available. There are, however, repayment options, including refinancing your student loans.

It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.

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

Does Sallie Mae service federal loans?

Sallie Mae only services private student loans, though that wasn’t always the case. If you have a loan that originated before 2014, it may have been a federal loan that started out with Sallie Mae and then moved to Navient. In early 2022, Navient shifted its federal student loans to a new servicer, Aidvantage.

How do I know whether my student loan is private or federal?

You can visit the Federal Student Aid website; information about your federal loans will be listed in your dashboard.

What student loans are not eligible for forgiveness?

Private student loans are not eligible for federal forgiveness.

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.

SOSL0923030

Serving the country could serve your bottom line. The Army, Navy, Air Force, Coast Guard, and National Guard offer programs for repaying part or all of your student loans, if you qualify.

Does the Military Pay Off Your Student Loans?

It might, but you must choose to work in specific military specialties, score at least 50 on the Armed Services Vocational Aptitude Battery, and commit to years of duty.

Military College Loan Repayment Program

Military enlistees, and some already enrolled members, can receive student loan repayment assistance of up to $65,000 for a three- or six-year commitment. Federal student loans and even some private student loans may be forgiven.

To qualify for the LRP programs, you cannot have previous military experience. You must choose to work in one of the military occupational specialties that the military branch is seeking. And many of the programs will require withdrawal from the GI Bill program.

Army Student Loan Repayment: Active Duty

The Army’s Loan Repayment Program is offered to highly qualified applicants enlisting for at least three years. If you meet the eligibility requirements, the Army will pay up to 33.33% of your current principal balance, or $1,500, whichever is greater, per year served. The maximum in loan assistance is $65,000.

Army Reserve College Loan Repayment Program

For this Reserve repayment program, you must enlist for at least six years. The Army will repay 15% of your outstanding principal balance or $1,500, whichever is greater, after each year of service. The total can’t exceed $20,000.


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

National Guard Student Loan Repayment Program

To qualify for the National Guard Student Loan Repayment Program, you must enlist for at least six years. You could earn up to $7,500 each year of the incentive term, or up to $50,000 in total student loan repayment.

Navy Student Loan Repayment Program

The Navy will pay 33.33% of the principal balance of a borrower’s federal student loans or $1,500, whichever is higher, for each year of service, up to three years.

The Navy Loan Repayment Program may pay up to $65,000 toward a service member’s student loans.

Coast Guard Loan Repayment Program

The Coast Guard offers new members who commit to three years of service up to $10,000 in loan repayment each year after the first year of active service. The maximum assistance is $60,000.

Health Professions Student Loan Repayment Program

This Army program eases the student debt of doctors, dentists, and other health care professionals who are on active duty or in the Army Reserve. Borrowers can get up to $40,000 of their student loans repaid annually. The maximum assistance is $120,000.

Then there’s the Air Force Financial Assistance Program, for medical and dental residencies. You may receive more than $45,000 for every year you participate in the program plus a stipend of more than $2,000 per month to cover living expenses. Upon completion of your residency, you will have a one-year obligation for each year of participation, plus one extra year.

Prior Service Soldier Loan Repayment Program

Members of the Army Reserve with prior military service may receive up to $50,000 for student loan repayment.

Air Force Judge Advocate General’s Corps Loan Repayment Program

Eligible judge advocate generals (JAGs) can apply for up to $65,000 in student loan repayment. After you have completed the first year as a JAG officer, payments are made directly to lenders for three years.

Other Loan Forgiveness Programs for Military Personnel

National Defense Student Loan Discharge

Active-duty soldiers who have served in hostile fire or imminent danger pay areas for at least one year are eligible for cancellation of their federal Perkins Loans.

A borrower may see 100% of their loan principal, plus interest, canceled for a five-year term of service that began on or after Aug. 14, 2008.

Veterans Total and Permanent Disability Discharge

If you are totally and permanently disabled, you may qualify for discharge of your federal student loans or TEACH Grant service obligation.

In 2021, eligible borrowers identified as totally and permanently disabled based on data matching with the Social Security Administration began automatically having their federal student loans discharged.

Public Service Loan Forgiveness

In the Public Service Loan Forgiveness program, borrowers who serve full time in the military or who have gone on to other types of public service, including in government agencies, many nonprofits, police departments, and public health organizations, may have any federal student loan balance discharged after making 120 payments (not necessarily in a row).

To qualify, you must sign up for an income-driven repayment plan, meet the job criteria, and make 10 years’ worth of on-time payments.

Other Student Loan Benefits for People in the Military

Interest Rate Cap

Under the Servicemembers Civil Relief Act, the interest rate on any debt incurred before enlisting in the military, including both federal and private student loans, is capped at 6% while you’re on active duty.

Interest Waiver for Those at Dangerous Posts

The Department of Education announced in late 2021 that Under the Higher Education Act, service members deployed to areas that qualify them for imminent danger or hostile fire pay would have no interest accrual on certain federal student loans that were first disbursed on or after Oct. 1, 2008.

The Takeaway

Military student loan forgiveness is possible if you clear a number of hurdles. But you might still need to pay at least a portion of your loans while you’re enlisted and after you resume civilian life.

For many people, refinancing student loans can be a way to get a lower interest rate or a lower monthly payment, especially with a solid credit and employment history. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

Refinancing allows you to take out a new loan, with new terms, and use it to pay off your existing federal or private student loans. While doing so can have advantages, you’d be giving up federal programs like Public Service Loan Forgiveness and income-driven repayment plans, and some of the military-specific loan repayment assistance.

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

Does the VA forgive student loans?

The Department of Veterans Affairs has a student loan repayment program for employees in certain occupations. You may be eligible to receive up to $10,000 per year, with a maximum of $60,000, toward the debt.

The VA also offers the Education Debt Reduction Program for health care providers who serve veterans. Up to $200,000 in student loan repayment is offered.

How much student loan debt will the military pay?

Generally up to $65,000, depending on the military branch.

Do 100% disabled veterans pay student loans?

A borrower who is declared totally and permanently disabled is typically not required to repay federal student loans.

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.

SOSL0923037

If you borrowed a federal student loan to pay for higher education costs, you won’t make payments directly to the government. There are a number of loan servicers who work with the U.S. Department of Education to oversee loan repayment for federal student loans.

Understanding who your loan servicer is, and what they do is essential for the loan repayment process.

What Are Student Loan Servicers?

Student loan servicers are companies that take care of the disbursement, billing, and customer service aspects of your federal student loans. They can help you figure out things like which repayment plan you should be on and whether to consolidate your student loans.

Need deferment or forbearance? They can also help you set that up. Loan servicers are basically a one-stop shop for everything you need to know or changes you need to make on your federal student loans.

List of Major Student Loan Servicers & Companies

Here are some of the major student loan servicers:

EdFinancial Services (HESC)

Address: P.O. Box 36008, Knoxville, TN 37930-6008
Phone: 1 (855) 337-6884
Website: www.edfinancial.com

Located in Knoxville, Tennessee, EdFinancial Services has been providing loan servicing for over 30 years. They work with both federal and private student loans, as well as schools that need help with things like financial aid processing.

MOHELA

Address: 633 Spirit Drive, Chesterfield, MO 63005-1243
Phone: 1 (888) 866-4352
Website: www.mohela.com

MOHELA is a student loan servicer headquartered in St. Louis, Missouri with offices in Columbia, Missouri and Washington, DC. They have been around for over 40 years and focus primarily on federal student loans.

Nelnet

Address: P.O. Box 82561, Lincoln, NE 68501-2561
Phone: 1 (888) 486-4722
Website: www.nelnet.com

Nelnet is one of the biggest student loan servicers in the country. Headquartered in Lincoln, Nebraska, they service federal and private student loans under their financial services division. They also own Great Lakes Educational Loan Services, began servicing student loans from FedLoans, and are a for-profit company listed on the New York Stock Exchange.

Aidvantage

Address: For general correspondence, P.O. Box 300001, Greenville, TX 75403-3001
Phone: 1 (800) 722-1300
Website: https://aidvantage.com/

Aidvantage, a branch of Maximus Education, LLC, is servicing either Direct or FFEL federal loans for the U.S. Department of Education. Aidvantage took over the loans that were formerly administered by Navient, a student loan servicer who stopped working with the U.S. Department of Education in September 2021.

ECSI

Address: For assistance requests, P.O. Box 1289, Moon Township, PA 15108
Phone: 1 (888) 549-3274
Website: https://heartland.ecsi.net/

Founded in 1972, ECSI stands for Educational Computer Systems, Inc. In addition to working as a student loan servicer for federal student loans, they also provide support with tax document services, tuition payment plans, and refund management.

Default Resolution Group

Address: Correspondence can be sent to P.O. Box 5609, Greenville, TX 75403-5609
Phone: 1 (800) 621-3115
Website: https://myeddebt.ed.gov/

Part of the U.S. Department of Education, this organization provides information and assistance for borrowers who have federal student loans in default or have received a grant overpayment. Grants, such as a Federal Pell Grant, may need to be partially repaid in the event the student receives an overpayment.

​​Private Student Loans With SoFi

The loan servicer on a private student loan is typically the lender. Private loans can be helpful for students looking to fill funding gaps when federal aid and scholarships aren’t enough to pay for tuition. They don’t always offer the same benefits as federal student loans, like options for deferment or the ability to pursue Public Service Loan Forgiveness, so they are generally considered only if a student has closely reviewed all other options.

SoFi provides private student loans for undergraduate and graduate students, or their parents. These loans have no fees and borrowers have the option of four flexible repayment plans. When you borrow a SoFi student loan, SoFi is your loan servicer. Borrowers are able to make payments directly in the SoFi app or online and have access to 24/7 customer service.

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

How to Find out Who Your Student Loan Servicer Is

You don’t get to pick your student loan servicer, since they’re assigned to you when your loan is disbursed. If you’re not sure who your loan servicer is, don’t worry. Finding your servicer is easy. You can look it up by visiting the Department of Education’s student aid website, which has all the information about your federal student loans and contact information for the loan servicers.

Additionally, in some cases, student loans may be transferred between servicers due to the company’s closure, the expiration of a government contract, and more. Should this happen, borrowers are supposed to be notified of the change.

Can You Change Your Student Loan Servicer?

While sometimes student loans can be transferred from one servicer to another, this usually doesn’t happen simply because a borrower requests it. The main way you can change servicers is if you refinance your student loans from federal loans to private student loans.

By refinancing, you can potentially cut interest costs over the life of the loan, if you’re able to qualify for a more competitive interest rate. Refinancing can also allow you to adjust the repayment term on the loan, though extending the loan’s repayment term may increase the interest costs over the life of the loan.

However, there are also some downsides. If you refinance your federal student loans with a private lender, you’ll no longer be eligible for income-based repayment plans, and you might lose other federal loan protections like the option for deferment or forbearance. This may be important if you are uncertain about your future income or you are struggling with your repayment.

The Takeaway

Student loan servicers are private companies that work with the U.S. Department of Education to administer federal student loans. They manage student loan payments, oversee deferment or forbearance applications, and provide assistance to borrowers with questions about their repayment plan or their student loans in general. Private student loans are generally managed by the 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 is the most common student loan?

Federal student loans are the most common type of student loan borrowed to pay for higher education costs. Federal student loans include Direct Subsidized and Unsubsidized loans and PLUS Loans. Approximately 92% of student loans were federal as of July 2023.

Who are the main student loan servicers?

The U.S. Department of Education works with six student loan servicers who manage and administer all federal student loans. Private student loans are, for the most part, serviced by the lender who made the loan. In some cases, your loan servicer may change. If it does, you should receive a notice of the change.

What do loan servicers do?

Loan servicers are companies that manage the different facets of student loan repayment. They administer the loan, collect payments, can assist and can provide assistance to customers with questions related to their student loan repayment.

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.

SOSL0923001

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.

SOSL0923032

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.

SOSL0823028