Refinancing your loans could be a great way to lower your interest rate and even your monthly payment. However, there are some risks to be considered when refinancing your federal student loans. Primarily, refinancing federal student loans makes them private loans which will then be held by private lenders. This means that your loans lose the benefits of federal loans which include:
- access to loan forgiveness through the Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF) programs
- flexible repayment plans such as Income Driven Repayment plans
- interest free payment deferments
- or potential loan discharge due to disability or death.
If you are interested in refinancing your federal student loans, please take the time to consider the pros and cons before applying to refinance. If you are ready to refinance, make sure to also look into the various lenders you can refinance with to find the best rate available to you!