Can I Refinance If I Have Both Federal and Private Student Loans?

Many college students end up having to borrow more than one type of student loan––some federal, some private. Each might have different loan servicers, due dates and interest rates, which can make repayment a lot to keep track of. 

It’s no wonder one of the most common questions is: Can I refinance all of my student loans into a single loan?

But, more importantly, should I?

To begin, let’s walk through how refinancing student loans works so you can make an informed decision that fits your financial goals.

Understanding Federal vs. Private Loans

Not all student loans are created equal and understanding which types you have is the first step.

Federal loans are backed by the U.S. government and come with valuable benefits, such as Public Service Loan Forgiveness (PSLF), Income-Driven Repayment (IDR) plans and options like federal deferment and forbearance.

Private loans are issued by banks, credit unions or private lenders. They don’t offer the same protections as federal student loans and may carry higher interest rates, but refinancing can sometimes help lower those rates overall.

Why does this matter? Once a federal loan is refinanced, it becomes a private loan, which means you lose access to federal benefits. This trade-off is crucial to weigh when deciding which loans to refinance.

Can I Combine Federal and Private Loans in One Refinance?

Yes. Many private lenders allow you to include both federal and private loans into a single refinance loan. That means one monthly payment for all refinanced loans, the possibility of a lower interest rate and the option to choose from multiple repayment terms (often 5, 10 or 15-years) to fit within your budget and goals.

When Refinancing Could Be a Smart Move

If you have a solid credit score, a stable income and no plans to use federal loan programs like PSLF or IDR, refinancing may be the right move for you.

The pros of refinancing include:

• Simplified repayment: If you’re keeping track of multiple payments, refinancing combines them into one.

• Lower interest rates: If you have a strong credit score and history, you could qualify for a better rate, saving you money over time.

• Flexible terms: If you want to pay your debt off faster, you can choose a shorter term; if you want to reduce your monthly payment, you can choose a longer term.

For borrowers with higher balances, even a small rate reduction can add up to thousands in savings over time.

When to Think Twice

If you’re eligible for PSLF, benefit from an IDR plan or value the safety net of federal deferment and forbearance, refinancing your federal loans could cost you more in lost benefits than you’d save in interest. This is especially true if you work in public service, have variable income or are in a lower-paying field where income-based payments make sense.

Refinancing All vs. Some of Your Loans

The good news is, refinancing isn’t all-or-nothing. Many borrowers refinance only their private loans, which can still lower your interest costs and simplify your repayment without losing those valuable federal protections.

What Lenders Look For

When applying to refinance, most lenders focus on three key factors:

• Your credit score: A strong credit history helps you qualify for better rates.

• Your income stability: A steady job or reliable income reassures lenders you can handle repayment.

• Debt-to-income ratio (DTI): Lenders look at how much debt you carry compared to your income. Lower ratios usually mean better offers.

The better these numbers look, the better your chances of qualifying for a lower rate.

Summing Up

If you have both federal and private student loans, refinancing can streamline your payments and potentially save you money, but it comes with trade-offs. The right choice depends on your career plans, financial stability and whether you want to keep federal loan protections.

If you’re ready to explore your options, check out HESC’s refinance loan program designed specifically for Texas borrowers with loan amounts from $7,500 to $200,000 and an interest rate discount for automatic payments. We can help you find the refinancing strategy that works best for your unique situation.