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Bottom Line Up Front

  • Refinancing your student loans could help you lower your monthly payment, get a better interest rate or qualify for customized terms. 
  • If you refinance your federal student loans, you could lose certain benefits, such as forgiveness eligibility.
  • Refinancing student loans is different than consolidating them. Consolidation is exclusive to federal student loans.  

Time to Read

4 minutes

May 10, 2024

Managing student loans is an important part of your financial strategy. Whether you have federal student loans, private student loans or both, combining or refinancing them could simplify your budget and pave the way to lower monthly payments and customized terms.

Here’s what you need to know if you’re considering refinancing or combining your student loans: 

What is student loan refinancing?

Student loan refinancing lets borrowers replace their existing student loan or loans with a new loan from a private lender. It could also help borrowers reduce monthly payments and simplify repayments. 

Note that student loan refinancing is not the same as student loan consolidation. Refinancing could involve one loan or combining multiple private and federal student loans. Consolidation is exclusive to federal student loans.

It’s also important to note that if you plan to combine private and federal loans into a single private loan when you refinance, it could result in the loss of certain federal loan benefits such as eligibility for loan forgiveness.

Definitions to Know 


Private and/or federal student loans can be combined into 1 private loan. Potential benefits of refinancing existing student loans could include simplified repayments and a lower rate.


Only federal student loans can be consolidated. This is done through the federal government and aims to help preserve important benefits that come with federal student loans.

Private Lender

Banks and credit unions are examples of private lenders that can offer parent or student loan refinancing. Borrowers may have to satisfy certain financial requirements to qualify for refinancing.

Pros of Refinancing and Combining Student Loans

  • Lower interest rates. With a good credit score and financial history, you could qualify for a refinance loan with a reduced interest rate, which can lead to substantial savings over the life of your loan.
  • Reduced monthly payments. Refinancing could help you lower your monthly loan payments. By extending your loan term or securing a lower interest rate, your monthly payments could become more manageable.
  • Simplified repayment. Managing multiple student loans with varying interest rates and due dates can be overwhelming. Refinancing allows you to combine your loans into a single, easy-to-manage payment.
  • Improved credit score. Making consistent, on-time payments on your refinanced loan can have a positive impact on your credit score. A better credit score could open more doors in your financial future. 
  • Potential for fixed rates. If you have variable interest rate loans, refinancing may let you switch to a fixed interest rate. Fixed rates offer stability and protection against interest rate hikes, which makes budgeting more predictable.
  • Customized loan terms. Whether you want to pay off your student loans quickly or prefer lower monthly payments over an extended period, refinancing lets you make choices that align with your goals.

Cons of Refinancing and Combining Student Loans

Before refinancing or combining student loans, you should understand the potential drawbacks. Once they’re combined, there’s no going back to multiple private and federal loans. Here are some examples to keep in mind as you weigh your options:

  • Loss of federal loan benefits. Refinancing federal loans with a private lender means letting go of federal benefits such as income-driven repayment plans and loan forgiveness options.
  • Variable interest rates. If you refinance your loan to a variable interest rate, your payment could fluctuate, potentially leading to higher monthly payments if interest rates rise. This can make your loan repayments less predictable.
  • Good credit requirement. To qualify for favorable refinancing terms, you typically need a strong credit history and a good credit score. If your credit isn’t in tip-top shape, you may not qualify for the lowest interest rates or a refinance loan at all.
  • Extended loan term. Refinancing can lower monthly payments, but it often does so by extending the loan term. A longer repayment period could mean paying more in interest over time, even if your interest rate is lower.
  • Potential for fees. Some private lenders charge origination or application fees for refinanced loans. These fees can eat into any potential savings you might gain from lower interest rates. Consider the overall cost when evaluating options. Navy Federal Credit Union doesn’t charge application or origination fees on student refinance loans.
  • Reduced loan flexibility. When you refinance, you have the option to combine multiple loans into one. While this simplifies your monthly payments, it also means you can’t manage each loan separately.

Should you refinance and combine your student loans?

The decision to refinance and combine student loans often comes down to your unique situation. Look at rates and eligibility criteria from private lenders to determine if it’s feasible for you. If it is, ask yourself several key questions to decide if refinancing is the right option.

Student Loan Refinancing Questions to Consider

  • What are my current loan balances and terms?
  • What are my long-term repayment goals?
  • Am I eligible for any federal student loan benefits that I’d lose if I refinance my federal loans with a private lender? 
  • Is my credit score strong enough to get a better interest rate?
  • Am I struggling to manage multiple loans from multiple servicers? 

Student Loan Refinancing Questions to Consider

  • What are my current loan balances and terms?
  • What are my long-term repayment goals?
  • Am I eligible for any federal student loan benefits that I’d lose if I refinance my federal loans with a private lender? 
  • Is my credit score strong enough to get a better interest rate?
  • Am I struggling to manage multiple loans from multiple servicers? 

Use your answers to choose your strategy for student loan debt repayment. If you’re working hard to pay off your loans quicker or struggling to manage multiple private loans, refinancing and combining might be a smart approach. Or, if you rely on an income-driven repayment schedule for your federal loans or are hoping for student loan forgiveness someday, you might be better off consolidating on those federal loans. 

Refinance your student loans with confidence

If you decide to refinance and combine your student loans, Navy Federal is ready to help. From a wealth of informational resources to competitive rates and a refinancing process that’s simple and straightforward, we’re here to help you gain the confidence you need to take a smart approach to repaying your student loans. 

Next Steps Next Steps

  1. View our current rates for student refinance loans. You also can learn more about the options you have to manage student loan debt
  2. If you have a limited credit history, consider adding an eligible creditworthy co-signer who is a member with us. 
  3. Check out our simple step-by-step process for student loan refinancing to learn about what you’ll need to get the ball rolling. 


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.