Refinance Student Loans

Loss of Benefits Disclosures

Last updated: 11/10/2024

Think carefully before taking out a private refinance loan to pay off any private or federal student loans. You will lose certain benefits associated with your existing loans, which may include but are not limited to:

• Various federal repayment plans including Income-Driven Repayment (IDR). If you refinance your Federal student loans through a private refinance loan program, you will not be able to select Income-Driven Repayment or other flexible payment plans that are available to federal student loan borrowers.

• Certain deferment, forbearance, and alternative repayment options. You will lose eligibility for federal student loan deferments (e.g., Economic Hardship Deferment), forbearance, and loan forgiveness options (e.g., Public Service Loan Forgiveness) that are not available to you if you take out a private refinance loan. You may also lose certain deferment, forbearance, and alternative repayment options that were available to the underlying private loans included in the private loan refinance.

• Service members Civil Relief Act (SCRA) Interest Rate Reductions. If you refinance or consolidate your loans or cosign a refinance or consolidation loan while serving on active duty in the military, you will lose the ability to qualify for an interest rate reduction under the Servicemembers Civil Relief Act for all federal and private student loans applied for or cosigned prior to the start of your service.

• Federally subsidized interest.

• Eligibility for federal loan consolidation.

• You may also lose certain rights protected under the Federal Trade Commission’s Preservation of Consumers’ Claims and Defenses Rule [Holder in Due Course Rule] and/or the ability to qualify for certain private loan school misconduct discharge programs that are based on the Holder in Due Course Rule theory.

Go to Federal vs Private Loans for a description of federal loan benefits and repayment options available to federal student loan borrowers.