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How and When to Combine Federal Student Loans & Private Loans

Got student loans? We’ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent decisions about your student loans. And while you’re at it, check out SoFi’s new Student Loan Debt Navigator tool to assess your student loan repayment options.

One of the biggest student loan myths out there is that borrowers can’t consolidate federal student loans and private student loans into one loan.  It’s understandable why people think that, since this wasn’t an option for many years.  But now that the choice is available, it’s important to understand whether federal and private loan consolidation is right for you – especially when there’s the potential for significant cost savings on the line.

Can I Consolidate Federal and Private Student Loans?

While it’s not possible to use the federal Direct loan consolidation program to combine your federal student loans with private loans, it is possible to combine private and federal student loans by refinancing them with a private lender.  Through this process, you actually apply for a new loan (which is used to pay off your original loans) and you’re given a new—ideally lower—interest rate.

Why would you want to do this?  In addition to the advantages of loan consolidation (like having one, simplified monthly payment), refinancing student loans at a lower interest rate can mean big benefits, like lowering monthly payments or reducing the time it takes to pay off your debt, and cutting down on the total interest you pay over time.

Before you refinance federal student loans, there are a couple of things to think about.  Here’s an easy decision tree to help you understand whether refinancing federal loans is right for you:



Federal Student Loan Interest Rates, Revealed

Some people assume that federal loans always offer the best rates, but this just isn’t true.

Depending on loan type and disbursement date, your federal student loan rate could range from about 3% to 8%.  With prevailing interest rates at historic lows, some private lenders offer rates that are significantly better than a high-rate federal loan.  This is particularly true for grad school borrowers who use unsubsidized Direct loans and Graduate PLUS loans to finance their education.

So how important is interest rate, really?  Let’s compare a 10-year term, $80,000 loan at 6.84% (the current fixed rate on Grad PLUS loans) and 5.68% (the average 10-year fixed interest rate for SoFi refinance borrowers in 2015).*

Interest Rate Monthly Payment Total Interest
6.84% $922.28 $30,674.12
5.68% $875.36 $25,043.66


Things to Understand About Federal Student Loan Benefits

Some federal student loans offer benefits and protections that do not transfer to private lenders.  This is often the reason that people cite when they say you shouldn’t combine federal and private loans.  But before you dismiss the idea of refinancing, you should first take a look to see if any of these benefits apply to you.

For example, under the Public Service Loan Forgiveness Program (PSLFP), your Direct Loan balance may be eligible for forgiveness after 120 payments if you’ve worked in the public sector that entire time.  Similarly, the Teacher Loan Forgiveness Program is available for teachers who work in schools that serve low-income families full-time for five consecutive years. These are clearly great programs for people who choose careers in public service or education, but if that’s not you, they won’t do you any good.

There are also a number of federal loan repayment plans that can ease the burden for borrowers facing tough economic times. For example, the government’s Pay As You Earn (PAYE) and Income-Based Repayment (IBR) programs allow borrowers to make reduced monthly payments based on financial hardship.  But if your income is over a certain threshold, you won’t benefit from these programs.  And if you do qualify, but you’re at the high end of the spectrum, your slightly lowered payments may come at a disproportionate price in the form of accumulating interest.

It’s important to note that some private lenders offer their own benefits and protections.  At SoFi, for example, if you lose your job, we’ll not only pause your payments, we’ll help you find a new one.

Combining federal student loans and private loans through the refinancing process won’t make sense for every borrower, but it provides great benefits for some.  Now that you know it’s an option and you understand how it works, you can better assess whether it’s right for you.

*Click here to see student loan refinance examples that depict APR, monthly payment and total finance charges.

Editor’s Note: This is an updated version of a post we originally published in December 2013. We welcome new comments and questions below.

ABOUT Dan Macklin Twitter: @macklindan Dan Macklin is a co-founder of SoFi and former VP of Community & Member Success. Dan holds an M.S., Management degree from the Stanford Graduate School of Business where he was a Sloan Fellow. He also holds a B.A. in Business Economics from University of Durham in England.

100 thoughts on “How and When to Combine Federal Student Loans & Private Loans

  1. Kevin Igielski says:

    My son has 4 federal loans with OS principal of ~ $28,000 and an interest rate of 6.8%. He has made almost 2 yrs of payments and is finishing his 2nd year as a Financial manager with General Electric.

    I am trying to help him consolidate his loans at a lower rate and heard about your program.

    • Hi Kevin – You or your son should give us a call to discuss his individual situation: 855-456-7634 We’d be happy to discuss options with you.

  2. Hello I am a teacher with over 80,000 in student loans. My private loan from sallie mae is at 9.25% and they are giving me no help. My large payments aren’t making a dent. I am looking for some help for this loan.

  3. I have about 21,000 and have paid on time for almost 8 years. I didn’t graduate can I qualify?

    • Hi Chad,

      Unfortunately, graduation is one of the conditions we agreed to with our capital partners in order to keep the cost of the loans inexpensive. We realize there are some great candidates out there who have not graduated, but at this time we don’t have the capital for it. Let us know if you have any other questions!

  4. Can you do this with only your private loans?

    • Hi Vanessa,

      Yes, if you only have private loans, you can apply to refinance them with SoFi. The majority of borrowers have both federal and private student loans, which is why this blog post focused on consolidating the two types of loans through the refinancing process. But plenty of borrowers come to us with just private loans.

      Let us know if you have any other questions!

  5. Katie kirclich says:

    Interested to see if consolidating all my student loans would be a good idea. Also need a low interest rate!

  6. Yes, If you have Federal Student Loan debt, then putting together a budget and student loan payment plan is crucial to your financial health. Budget analysis, and countless resources help you manage your debt.

  7. Dale Braddock says:

    My son, Bishop Braddock, has a private loan with Sallie Mae at an unbelievable rip-off rate of 10 percent, $26,000 now $46,000. He has been teaching at a Georiga middle school for the last ten years. Please advise me what steps he needs to take to refinance

  8. I have a question if anyone will see this:

    I have already refinanced one of my student loans with SoFi (Thank you!)

    I have not refinanced the other because I would like to work for the government, but I have been unsuccessful at this point. I have been paying off my loans for over a year now.

    How long is the right amount of time to wait before refinancing? At some point I assume it is not worth it to wait for the government job, but I am just not sure when.

    I am anxious to refinance the other federal loan (at 6.55% yikes) but I dont want to miss out on any more future opportunities. Thanks again

    • Gina, are you waiting to refinance because you’re hoping to have your federal loan forgiven through the PSLFP? If so, there’s really no hard and fast rule, but you could model different scenarios using an online calculator like this one:

    • Gina – the most obvious cutoff date to me would seem to be when your federal loans have less than 120 payments left on them. Since that is the minimum number of payments you MUST make while employed in public service – it would only make sense that if your loans are down far enough that you literally can no longer make 120 payments while in PS. If you havnt found a fed job by the time you have 10 years left at minumum payment on your fed loans- consolidate ( if the interest rate is better)

  9. I have both Federal and Private Student Loans, it is possible to do with with only my private loans?

  10. Latweeta Smyers says:

    Can you be denied and why? But, if you are approved, does the PSLFP also apply to your private loan?

  11. I just got approved for a 2.87% variable interest rate or a 5.44% fixed – both at a 20 year term. Dave Ramsey’s program advises you to never refinance with a variable interest rate. BUT moving from my current 8% at Sallie Mae to just a 5.44% wouldn’t even be worth it, really. Do you think taking the risk of a variable interest rate is worth it?

    • Jessica, we’re not in a position to advise you either way, but here are some things to take into consideration. People typically consider a variable rate loan when they’re reasonably sure they can pay it off pretty quickly – this post has more info if you’re interested:

      As for whether cutting your rate from 8% to 5.44% would be worth it, it generally depends on how much you’re refinancing – for some borrowers that would actually equate to significant savings. This calculator can help you do the math:

      And finally, just remember that if these are federal loans, you’ll want to consider the federal loan benefits you’d be giving up by refinancing (which are outlined in this post). Hope that helps, and let us know if you have any other questions!

  12. I have 1 federal and two private loans that are in collection all together they equal 50,000.

  13. This is a very good blog.This blog simply describes how to cosolidate your student loanstudent loan consolidation service

  14. Sofi is different from other lenders. It is doing a new thing to help you who have financial difficulties with federal loans. You can not pay returns due to a very large number.

    What is offered by the Sofi as you described above is great. It can help you to consolidate the debt consolidation federal and private loans.

    The important thing is you have to build up a high credit score. Because, the private lenders always require you to have a high score if you want to do with their refinance.

  15. question… I have federal loans and my parents obtained parent plus loans that I make the payments on. Can I consolidate these 2 type loans together because I would like to have a lower rate plus the tax advantage since I do make the payments.

  16. Michael Cope says:

    I am looking to refinance to get my rates down. What fixed rate can I expect from you?

  17. I have several private loans that I used for college through key bank and they will not consolidate them in to one. the total is 55,000 and I can’t afford to make payments on all of them- I am on an income based repayment plan from Great Lakes that didn’t cover my key loans. I am a single mother and I am trying to get a loan to buy the house I am in so my payment will go down and the key loans are what is standing in my way- key banks only suggestion was to pay on one loan but they would still have to continue collections on the others so they would still say charged off- I have a mortgage loan officer that will work with me and get me my loan for the house if I can take care of the key loans- she is researching it for me and in my own research I found your website- is this something you can help with?

  18. my son needs to take one class and he will be graduated in May 2016. We have a cosigner loan, when will we qualify to lower our rates with you? Also he is looking for to borrow money for this class. How can he go about getting started with SoFi?

  19. If I refinance my student loans, will I still be able to deduct the interest on my tax return?

  20. If I consolidate my 1 private and several federal loans, would it be possible that specific loans (i.e., nursing school loans) be extracted and submitted on my behalf should I apply for a nursing loan repayment program? I’ve had difficulty with the federal nursing loan repayment program because they don’t pay back loans that have been consolidated. This is despite the fact that I CAN go onto the National Student Loan Service website and outline every loan I had during my nursing school tenure.

  21. I have already consolidated my Parent Plus Loans into one Federal Unsub Consolidation loan. Can I refinance this loan @ SoFi?

  22. Stephanie Rosetti says:

    Am I eligible if I finished my graduate degree program even if I plan to pursue a more advanced degree in the future? I would like to consolidate my undergrad and Masters’ degree loans, but I may enroll in a PhD program eventually.

  23. I’m trying to consolidate my personal loan ($17,000) and my student loans ($29,000); is it possible?
    Hope to hear from you soon.
    Thank you.

  24. As a teacher in a low-income urban school district, if I refinance/consolidate my loans through sofiu, would I lose the ability to get loan forgiveness for working in the public sector? I will also qualify for the stipend of $17,500 after 5 years for being a highly qualified math teacher in a low-income district. Will that be jeopardized if I refinanced as well?
    Thank You.

  25. I heard about SoFi from my Alma Mater, Stanford University. It’s a little upsetting that SoFi requires that you have a “large” sum of student loans in order to refinance. I’m sitting here stuck with these high interest rates on my student loans, but I don’t have enough debt to refinance, and I don’t make enough to just pay them all off. I have debt from community college and debt from Stanford sitting at 6.55% and 5% APR, much higher than refinance rates that are available. But since I’ve been paying them off for a couple of years, they aren’t high enough.

    I’m definitely going to recommend to Stanford that they not help SoFi market to their Alumni!

  26. I work on a mortgage company and the very best advice I really could offer is to look around for the
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    of borrowers apply for a mortgage with just one lender and accept
    whatever interest rate and fees they offer.

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  36. So if I am considering going Officer in the Army.. my 65K I currently have with you doesn’t qualify for any type of repayment incentive for serving my country?? Non of this is written on the site.. dang wish these NON-benefits were made clear at the time of enrolling. Is there ever a time to send my loans back to original borrower? I will gladly take back the $1000 I likely saved in interest the past 5 months if that means getting 1/3 of this balance wiped clean each year I am active.

  37. Richard Brisbin says:

    My daughter will soon finish dental school with substantial federal student loan debt, and will enter a residency program in a dental speciality field. Her income during her three year residency will be quite modest, but afterward it should be ample to handle her debt load. It is unlikely but possible that she will then work in a public or military job. I think the loan servicer for her federal loans will allow a repayment plan that her residency income can accommodate. Would SoFi do the same?

    • Hi Richard,

      Thanks so much for leaving a comment, congratulations to your daughter on finishing dental school! Everyone’s situation is different, and our Customer Service team would be happy to speak with you about your specific circumstances and to tell you more about SoFi’s products and rates. You can reach them at (855) 456-7634.

      You’re also welcome to check out our Student Loan Refinancing webpage and apply online.

      Best of luck to you and your daughter!

  38. Can I combine mine and my wife’s student loans though sofi?

    • Hi Andy,
      Everyone’s situation is different, and our Customer Service team would be happy to speak with you about your specific circumstances and to determine your eligibility for consolidating loans with SoFi. You can reach them at (855) 456-7634.

      We also have information about our Student Loan Refinancing products on our FAQs page that you might be interested in. Thanks for reading our blog!

  39. I am wondering if you refinance loans and pick say a 10 year repayment plan are you able to make additional or higher payments to pay if off sooner if able or is there a penalty for doing so?

    • Hi Karen,

      Thanks for your question and for reading our blog! Everyone’s situation is different, and our Customer Service team would be happy to speak with you about your specific circumstances and to determine your eligibility for consolidating loans with SoFi. You can reach them at (855) 456-7634.

      We also have information about our different loan products on our FAQs page that you might be interested in to learn more about what we offer. Thanks again for reading our blog!

  40. Nancy Ippolito says:

    My son graduated college in 2015 and can’t find a decent paying job over $10 hour. I have 56k in parent plus loans and he has 25k in private loans. We’re in forbearance now, we want to combined all loans together and get them into my son’s name. Can this be done and if so how? I have worked in public sector for 22 years, would my time count towards pslfp? We are desperate as I can’t afford these payments and the interest is piling up.

    • Hi Nancy,

      Thanks for reaching out to us. Everyone’s situation is different, and our Customer Service team would be happy to speak with you about your specific circumstances and to determine if SoFi’s loan consolidation is a right match. You can reach them at (855) 456-7634.

      We also have information about our different loan products on our FAQs page that you might be interested in to learn more about what we offer, and information about eligibility here.

      We wish you the best of luck!

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  42. i have about 240k in medical school debt. i consolidated/refi’ed with SoFi about a year ago and have been really happy with my rate. I have earned more income this year than ever before in my career and was on the PSLFL track but when i entered my AGI for the year my projected loan forgiveness is no $0. HOW? i already fork over about half of my monthly income to my lenders. Regardless, is it a better idea to wait and see what happens in the future with loan forgiveness programs or refi/consolidate now and just get rid of these dang things ASAP?

    • We’re glad to hear you’ve been happy with your SoFi rate! You can see our FAQs for information about loan forgiveness and our refinancing & consolidation programs. If you have questions about your specific situation, you can reach our loan consultants at 955-456-SOFI.

  43. I have a private loan, my mom has a Parent PLUS for me, and I have two federal loans. My federal loans are on income-contingent and are being consolidated with fairly good payments that I can make. What is killing me is my private loan and the one that I am paying to my mom. With all my loans, I am barely scrapping by and eating Ramen Noodles every day! The private and plus loans are over $100 a month. The two payment together are more than my federal loans. Also, the balance of both of those together are approximentally $10,000…half of the two federal loans. Can I get a loan that will pay the private and plus loans off so I can have one payment for them? I would like to get the one loan off my mom’s account and also get one low payment. One problem: I have a great work history (11 years with the same company), but not-so-great credit due to past health problems.

    • Hi Danielle,
      Credit score is just one factor we take into consideration when considering loan applications. Check out our Eligibility Criteria for information about what we look at, and call 855-456-SOFI with any questions.
      Best of luck!

  44. National Student Loan Service Center says:

    Hello Dan Macklin ,

    Information you share in your blog regarding to student loan consolidation is really very good. I am very thankful to you for sharing such kind of stuff. We also serving the students with student loan debt consolidation, aimed to let the clients pay off their debts in an easier manner. Again Good Work 🙂
    Keep it up (Y)….

  45. Hello,

    I just filled out the application to consolidate a few private loans (Navient (originally Sallie Mae) $83,000 total). I make over $60K/year and was denied on immediately on the application. The $60K does not include what my spouse brings in as well ($35K).

    Why would I be denied?

    • Hi Elliot,
      One of our loan consultants has reached out to you regarding your application, we hope that helps to explain the situation. If you have any additional questions or concerns, feel free to reach out to us at 855-456-SOFI.

  46. I need help with my sons student loans. Some are in my name, some are in his. I am making the payments as that was the agreement. I would like to consolidate all of them into just my name as his income had affected the usage of paid interest on my taxes. He could not utilize it either. Please advise.

    D Brooks

  47. Noah Wilson says:

    I very thought provoking and some timeless and classic writing that weaves in and out of investing/finance. Sadly no comments but that might just ruin it; he’s really a writer, despite his considerable media and investment analysis skill.

  48. My son has 3 government loans totaling 100k and 1 private loan totaling 75K. No, he isn’t a doctor or a lawyer unfortunately. Is there help to consolidate that amount of debt? His sister has 2 government loans totaling 42K. So all together over 200k. Is there any help/option out there for me?

    • Hi there – There’s no limit to the amount that you can consolidate/refinance with SoFi, and no requirement to work in a certain field. SoFi members come from all kinds of backgrounds and work in a wide variety of industries.

      We recommend contacting our loan consultants at 855-456-SOFI to see what options are available to you and if SoFi is the right choice. You can also read more about student loan refinancing and apply online on our website.

      Best of luck to you and your children!

  49. Hello, can I refinance my student loans?

    I was making more than the minimum payment by about $50 each month at the beginning for about 6 years.
    Then I lost my job and started teaching part time and earning far less than minimum wage per semester.
    And thanks to the Unaffordable Health Care Act…I can no longer teach summer classes and my class load was cut
    and no more tutoring.

    Can I refinance my student loans with an interest rate under 8%

    Is there a cap to the amount that I will need to pay back?

  50. I have a co-signer on a current loan with another bank. Is it possible for him to refinance my loan without me?

    • Hi Dave – If someone is not the primary on a loan, it isn’t possible for them to refinance with SoFi. You can read our FAQ page, or reach us at 855-456-SOFI with additional questions.

  51. Be careful about this company.

    They say if you lose your job they’ll pause your payments, which is true, but if you get a new job that pays less than your last one, they will not reduce the monthly payments or let you refinance to extend the term. The federal income-based repayment plans would cover this type of situation, so when they say “But if your income is over a certain threshold, you won’t benefit from these programs” they are lying to you.

  52. K Bickerton says:

    As a parent, if I refinance my student loans taken out for my daughter, will I receive a Form 1098-E (PDF), Student Loan Interest Statement from SoFi and continue to claim the loan’s interest payment?

    • Hi there – Great question.
      We work w/ our servicer MOHELA to issue 1098-E student loan interest statements for PPR loans. They are issued at the start of every year, typically around the time people receive other tax related documents.
      Hope that helps! If you have additional questions, our loan consultants can be reached by phone at 855-456-SOFI

  53. I made a deal with my parents to pay half of my education. To pay for this my parents took out a parent PLUS loan in their name and an unsubsidized loan in my name. Could I consolidate and get a loan that would enable me to pay my parents the portion of the PLUS loan that I owe and pay off the unsubsidized loan?

  54. If I switch from Sallie Mae to SoFi so I still have the option to go back for masters and not make payments while I am in school?

    • Hi Jessica – We don’t pause or defer payments when members go back to school. We’d encourage you to refinance with us as you’re finishing your graduate program once you have an offer letter (to serve as proof of income).

      You can read more about our offerings on our website:

  55. Well this well be a great idea,but my question is ” Is refinancing happen only in one time scenario or it will be happen often if i wanted to?

    • Hi there – Once a loan is refinanced with SoFi it can’t be refinanced again through us. If you choose to then refinance with another company, that is your choice (though we work hard to make sure that we have great offerings).

      If you’re interested in refinancing with SoFi, check out our online application:

  56. I have 2 different private loans that have a 5% variable interest rate and a 7.75%. I want to change these to direct subsidized loans to qualify for loan forgiveness. How do I do that? I am racking up interest day by day and never paying them off…

  57. I have 2 private loans racking up interest with 5-8% apr. How do I qualify for loan forgiveness and change from private to direct subsidized or federal?

  58. advancecapitalnow says:

    I have 1 federal and 1 private loans that are in collection all together they equal 35,000

  59. If you have both federal and private loans, do you have to consolidate all loans to qualify for a private loan or can you keep your federal loans and only consolidate your private ones?

  60. If I refinance my student loans with SoFi, will I still receive a Form 1098-E and be able to claim the yearly interest as a deduction?

    • Hi Dayton – Although we are a private lender, the loans will remain as private educational loans in their credit report and you can access your 1098-E on our servicing site for tax purposes. However, it’s best to talk to a tax professional about deductions.

  61. If my son had to leave school for medical reason and did not graduate can we still get a refinancing loan to lower the payment?

  62. Hello, I currently have 3 student loans. My one loan with high interest rate is under my fathers name. Am I able to consolidate or refinance all 3 loans?

    • Hi Lauren – Yes, you would need to assume the loan under your name. Give us a call at (855) 456-SoFi and we can walk you through it.

  63. I have federal student loans and parents plus loans that my parent’s signed for to help me that I agreed to pay, can I consolidate federal student loans “and” parents plus loans in my parents’ names into one payment with SOFI?

    • Hi Sierra – Yes. Give us a call at (855) 456-SoFi and we can walk you through how you would assume the Parent Plus Loan.

  64. Hello. I have been accepted at a nursing school in Georgia, however before I can begin the program I have to pay off a tuition bill before the school releases my transcript. What can your company do for me?

  65. I owe 28k in sallie mae loans. I didn’t graduate school. My grandfather cosigned for me to get the loans. How can I reduce the 13% interest rate? I am current on my payments but I just lost my job. Are there banks that will refinance? My grandfather only makes 12k/yr now that hes retired???

  66. Hi Macklin,
    Nice tips. I work at a bank and rarely see any loan apps to consolidate student loans. Nice tips provided, the reason I likely don’t see many requests for this is college graduates with student loans don’t usually own homes, so they’re not eligible for our lowest form of financing…

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