Student Loan Repayment: Choosing a Plan
Refinancing a federal loan privately is a one-way door. Know what is behind it before you walk through.
At a glance
Figures checked 1 Sep 2026
What to take away
- Federal loans carry protections — income-driven plans, forbearance, forgiveness programmes — that private refinancing eliminates permanently.
- Income-driven plans lower payments and usually increase total interest.
- Private loans have no such protections, so refinancing them carries less downside.
First establish which loans are federal and which are private. The answer determines what options exist.
| Plan | How it works | Suits |
|---|---|---|
| Standard | Fixed payments over ten years | Stable income, wants the lowest total interest |
| Graduated | Starts low, rises over time | Expecting income growth |
| Extended | Longer term, lower payment | Large balances |
| Income-driven | Payment based on discretionary income | Payments unaffordable relative to income |
Refinancing federal loans with a private lender permanently forfeits income-driven repayment, federal forbearance, death and disability discharge, and eligibility for any federal forgiveness programme. The rate saving has to be substantial to justify losing all of that.
Federal repayment programmes have changed repeatedly in recent years. Confirm current plan names and terms on the federal student aid site before making a decision.
Common questions
Compare the rate to a realistic expected return. Federal loans in the 4–5% range are close to a coin flip; private loans at 9% are not.
Treatment has varied by programme and by year. Check the current federal and state position before relying on a projection.