What does refinancing actually do?
A private lender pays off your federal loans and issues you a new loan of its own, at a rate it sets from your credit and income. Nothing about the debt is forgiven or reduced — it changes hands. Everything that made the loan federal ends at that moment, because the borrower no longer holds a federal loan for any of those programs to apply to.
This is a one-way door. A repayment plan can be switched again next month. A consolidation, though irreversible in its own way, at least keeps you inside the federal system. Refinancing leaves it, and there is no route back — the Department of Education does not re-adopt a loan a private lender now owns.
What do you give up, permanently?
- Income-driven repayment. RAP, IBR, PAYE and ICR all set a payment from your income. A private loan sets it from the balance and rate, so a drop in income does not lower the bill.
- Public Service Loan Forgiveness. PSLF forgives Direct Loans only. Refinancing ends eligibility, and qualifying payments already counted stop mattering.
- The forgiveness clocks. RAP forgives what remains after 30 years of qualifying payments; IBR after 20 or 25. Those balances can be large, and giving them up is usually the biggest number in this decision.
- Discharge on death or permanent disability, which federal loans carry and private loans generally do not.
- Federal deferment and forbearance, and any future federal relief.
The size of the first three depends entirely on your own numbers, which is why a general answer is not much use. A borrower who will clear the balance before any forgiveness date gives up little; a borrower with a projected discharge gives up that discharge.
When does refinancing make sense?
The case is strongest when all of the following hold at once, and it gets weaker as soon as any one of them stops:
- You are not pursuing PSLF and do not expect to.
- No plan you are eligible for projects any forgiveness — you would repay the balance in full either way.
- Your income is stable and comfortably covers a fixed payment, so income-driven protection has no value you are likely to use.
- The rate you were actually offered is meaningfully lower than the rate you pay now.
The rate in the advert is not the rate in the offer. Lenders quote a “rates from” figure, which is the best tier and depends on credit, income and term. Comparing your federal loans against an advertised rate rather than the rate you were actually quoted will overstate the saving, sometimes by a lot.
If you are married, refinancing changes what your spouse pays
This is the part almost nothing else mentions. Under 34 CFR 685.209(g), when a married couple files jointly, an income-driven payment on RAP, IBR or PAYE is worked out from joint income and then split between the spouses in proportion to each one’s federal balance.
A refinanced loan is no longer federal. So when one spouse refinances, their share of that joint payment falls to nothing and the other spouse’s share rises — potentially to all of it. The remaining spouse’s monthly payment can go up sharply even though nothing about their own loans changed.
Filing separately, the split does not apply at all and nothing moves. That difference can be worth more than the rate, and it is a calculation rather than a rule of thumb — filing separately changes your taxes too, which is a question for a tax professional.
How do you compare it against your own federal options?
Put your real numbers in and look at both sides at once: what the private loan would cost over its term, and what your federal plans would cost including any tax on a forgiven balance. The comparison on the homepage calculator runs entirely in your browser, shows what refinancing would forfeit in your own dollars, and — if you are married — shows what it would do to your spouse’s payment. Nothing you type leaves your device, and RepayCompass takes no commission from any lender.
Before acting on any of it, confirm your own loan types and balances at StudentAid.gov and talk to your servicer.