SoFi

With the return of defaulted student loan collections and continued uncertainty surrounding income-driven repayment plans, student debt is once again emerging as a significant source of financial stress for employees across the country. And it’s not just workers who are feeling the strain — employers are increasingly affected as well.

Financial stress is known to contribute to lower job satisfaction, reduced engagement, and lost productivity. Now, new research suggests that student debt is a key factor in employee turnover, with debt-burdened workers significantly more likely to seek new opportunities compared to those without any student loan debt.

A recent study from the MissionSquare Research Institute, for example, found that employees with student debt were significantly less likely to say they would remain with their current employer compared to those without debt (39% vs. 61%). Only 34% of employees in the private sector with student loan debt indicated they’re likely to stay with their employer.

This aligns with earlier findings from the ADP Research Institute, which showed that any amount of student debt increases a worker’s intent to leave their current job — and those with the highest debt loads are twice as likely to be job-hunting compared to their debt-free peers.

Even if employees look but don’t immediately leave, these findings underscore a growing reality: Offering student debt repayment support may be more critical than ever for attracting and retaining top talent.

The Burden of Student Debt and How Employers Are Responding

An estimated one in four privately employed workers carries student debt. The average federal student loan debt balance is now $38,375, and the average total balance (including private loan debt) is $41,618. All told, 42.7 million borrowers currently owe more than $1.6 trillion in student debt, making student loan debt the second largest consumer debt balance in the U. S. (after mortgages).

Pervasive student debt is a barrier to financial security for many employees. Faced with such a heavy burden, borrowers are often unable to save for emergencies and retirement and may be forced to delay big life events.

Not surprisingly, many HR leaders are looking for ways to help. The number of employers offering student loan benefits more than tripled in the past five years, from 4% in 2019 to 14% in 2024, according to data from the International Foundation of Employee Benefit Plans. Here’s a look at some examples:

•   Athletico Physical Therapy: Athletico Physical Therapy, a national provider of orthopedic rehabilitation services partnering with SoFi at Work, provides eligible employees with a $100 monthly contribution (up to $1,200 annually) toward their student loans, starting on day one of employment. According to the company, this tax-free contribution can help the average Athletico employee save as much as $17,076 on their loan after eight years and pay the loans off 20 months faster.

•   Kimley-Horn: A premier engineering, planning, and design consultancy, Kimley-Horn took its award-winning employee benefits to the next level in 2024 with the introduction of matching 401(k) contributions based on an employee’s student loan repayments. How it works: Typically, the company offers a match of double an employee’s 4% contribution to a 401(k) with an 8% company contribution. Now, employees’ student loan repayments can replace all or a portion of the 4% contribution, allowing employees to continue to receive the company’s retirement match while paying down their student loans. Kimley-Horn also offers tuition reimbursement.

•   Community Health Systems: Tennessee-based hospital chain Community Health Systems (CHS) offers an employer-sponsored student loan repayment program designed to offset loan balances by up to $20,000 for most clinical employees. In addition, employees may consolidate their loans and possibly reduce interest rates through the program. CHS also offers a tuition reimbursement program that provides up to $5,000 in tax-free reimbursement annually.

•   CoStar Group: CoStar, a Washington, DC-based real estate data and research provider, offers a company match to an employee’s 401(k) for workers paying off student loans. The maximum total retirement match is 4%, as long as the employee contributes at least 4% of their pay directly to student loan repayment, or to their 401(k).

How to Implement Student Debt Benefits

These days, the question on many benefit leaders’ minds is not if they should implement student loan debt benefits but instead, what is the best way to do so. Below are some tips on how best to manage your student loan repayment benefits.

Consider Student Loan Reimbursement

Under current law, employers can contribute $5,250 annually per employee toward tuition reimbursement or student loan payments on a tax-exempt basis. The provision for student loan repayment, however, will only be available until Dec. 31, 2025, unless Congress passes new legislation to extend it.

Employers don’t have to pay the full $5,250. The average student loan payment is $536 a month, or $6,432 each year. Repaying even a small portion of these monthly payments is enough to impact your employees positively. As we saw above with Athletico, even seemingly small amounts can help employees save thousands of dollars in interest over the life of the loan.

You can start by offering a $100 or $200 monthly payment and increase the amount as you can. You could also offer different payments to different groups of employees. For instance, you might offer a lower payment amount to first-year employees than to those who have been with your company for a few years. This incentivizes employees to stay at your organization, reducing employee turnover and saving on talent acquisition costs.

To determine the amount that works for your company (and is likely to help retain workers), conduct an employee survey to find out how many of your workers carry student debt and would qualify for a reimbursement. You might also look at your future hiring expectations to estimate the number of new employees likely to join the program. From there, you can determine how much your organization can afford to contribute to each individual.

Consider Student Loan Repayment as Salary Deferral for Employer Match into Retirement

The Secure Act 2.0, which became law in 2022, is designed to encourage more American workers to save for retirement. Toward that end, it formally authorizes companies to match employees’ qualified student loan payments with contributions to their retirement accounts, including 401(k)s, 403(b)s, SIMPLE IRAs, and government 457(b) plans.

This provision is not only a win for employees, but also for employers. Lowering debt and helping workers save for the future boosts the overall financial wellness of your workforce. Benefits managers, like those at Kimley-Horn, hope this benefit will help attract talent and retain employees who see their retirement savings increasing and student debt balances decreasing.

If you’re interested in implementing a similar program, there are a few rules to keep in mind. A student loan matching benefit must abide by all the rules of a traditional match, including eligibility criteria, matching contribution rate, and vesting schedule. However, there is one exception: You are allowed to deposit the matching contributions to the employee’s 401(k) plan account less frequently than regular matching contributions, as long as you contribute at least annually.

Recommended: The Future of Financial Well-Being in the Workplace

Rethink Your Tuition Reimbursement Program

Now may be a good time to reevaluate your tuition reimbursement programs or introduce this type of benefit. Tuition reimbursement helps employees avoid taking out large student loans in the first place. It also benefits employers in multiple ways: For one, it helps employees gain new skills and knowledge they can apply at work. It also serves as a retention tool, since workers can take just a few classes per semester while continuing to stay on the job. Including a retention clause specifying they need to stay a certain length of time after completing classes can help you keep valued workers in your organization.

Some things to consider as you start or retool a tuition reimbursement benefit:

•   Types of payment: Generally, employees pay for their classes upfront and submit tuition reimbursement forms to their employers after successfully completing them, but this can be a barrier to participation. Consider paying for classes at registration or directly to the school, making it easier for employers to take advantage of this benefit.

•   Tiered payment: Some programs reimburse employees for a percentage of costs based on their grades. For example, an “A” might qualify for 100% reimbursement, a “B” would get 85%, a “C” might result in 75%, etc. Or, you might pay 100% only for classes with a passing grade.

•   Types of courses: Many employers pay for courses related to the employee’s career. Still, you might include classes that could help your workers pursue other positions in your company.

•   Institutions: Many programs cover any accredited institutions, but a growing trend is for employers to enter exclusive partnerships with education providers.

•   Service requirements: You might specify a vesting period before qualifying for benefits and/or require employees to stay with the company for a certain period after completing the course in order to keep the funds.

The Takeaway

Benefits that can help ease the burden of student debt are important tools employers can utilize to recruit and retain talent and promote financial wellness among employees. This is especially important in light of new data that shows employees who feel they have a heavy student loan burden are far more likely to be in the process of leaving their organization.

SoFi at Work can help. We’re experts in the student lending space. With SoFi at work, you have access to platforms and information that can help build the benefits you need to create a successful and loyal workforce.

FAQ

Are employees changing jobs because of student debt?

They may be looking to do so. Although it might seem counterintuitive, new research shows that employees with perceived heavy student debt burdens are more likely to be job hunting than their peers with lighter or no debt burdens.

What can employers do to retain employees with student debt?

To support employees with student loan debt and improve their intent to stay, consider offering a student loan repayment contribution program and/or matching 401(k) contributions for student loan repayment.

How many employees are struggling with student debt?

That number will depend on your workforce demographics, but about a quarter of privately employed workers in the U.S. carry student debt.

Photo credit: iStock/SrdjanPav

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2025 Social Finance, LLC. All rights reserved. Information as of November 2025 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOAW-Q225-009

In 2025, student loan debt remains a major obstacle to financial wellness for millions of American workers. While education is often viewed as the gateway to opportunity, the rising costs of higher education have left many employees burdened by debt throughout their careers.

With ongoing legislative changes, program delays, and economic uncertainty, navigating the student debt landscape has become increasingly complex. For HR professionals, this presents both a challenge and opportunity —- the challenge of creating benefits to address employee concerns about student debt, along with the opportunity to build a more engaged, loyal, and financially resilient workforce.

Here’s a look at the latest developments in student lending — and how HR can play a role in supporting and empowering employees burdened by education debt.

Key Challenges Employees May Be Facing

Despite federal efforts to ease the burden of student loans, 2025 has ushered in a new set of uncertainties. Here are some of the most recent changes in federal loan repayment that may be impacting the financial health of your employees.

Resumption of Collection Activities

The Department of Education (ED) resumed collections on defaulted students on May 5, 2025, after a roughly five-year hiatus. The action affects over five million borrowers who are now in default, with an additional four million in late-stage delinquency. Consequently, nearly 10 million borrowers could soon be in default, representing almost 25% of the entire federal student loan portfolio.

The ED has restarted collections through the Treasury Offset Program (TOP), which allows for the offset of income tax refunds and certain federal and state payments. If borrowers continue to miss payments going into the summer, Federal Student Aid will place them in administrative wage garnishment. This means up to 15% of their disposable income can be withheld from their paycheck and sent to their loan holder.

Legal Uncertainty Surrounding Repayment Plans

The Saving on a Valuable Education (SAVE) plan, designed to lower monthly payments and eventually forgive remaining balances, is currently on ice due to a court ruling that blocks its implementation. The roughly eight million borrowers who signed up for SAVE are now in an interest-free forbearance, and the future of the plan remains uncertain. The same court ruling also paused the forgiveness feature of the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) Plans.

A final resolution on these programs may come from the Supreme Court or through Congressional action.

Potential Changes to PSLF

The Public Service Loan Forgiveness (PSLF) program, which promises debt forgiveness for nonprofit and government workers after 120 qualifying payments, is facing renewed scrutiny. An executive order signed by President Trump seeks to limit which employees can qualify for loan forgiveness by changing what counts as public service. If these changes are implemented, some nonprofit organizations could lose their eligibility for the PSLF program.

Supporting Employees With Student Debt

HR departments have a unique opportunity to support employees in their financial journeys. While traditional benefits such as health insurance and retirement savings remain important, today’s workforce increasingly values financial wellness programs that address immediate concerns — chief among them, student loan debt.

Helping employees navigate their student debt repayment journey can lead to meaningful organizational benefits, including:

1. Reduced Financial Stress

According to SoFi at Work’s Workplace Financial Well-Being 2024 survey, employees spend nearly 14 hours a week stressing about finances, over half that time (8.2 hours) during working hours. Perhaps not surprisingly, one in three employees say financial issues impact their ability to focus at work, and nearly 25% say the stress reduces their productivity and confidence on the job.

Employer efforts to alleviate financial stress can lead to increased productivity, reduced absences, and improved overall employee well-being. When workers aren’t preoccupied with looming payments or default risks, they can bring more focus and energy to their roles.

Improve Loyalty and Retention

By actively addressing the student debt crisis and offering support, company leaders can foster a culture of support and empathy within the organization. This can create a positive work environment where employees feel valued and supported in their financial journey. Those employees may feel less inclined to look for a different employer, increasing your organization’s retention rates.

Employees may also be more engaged and connected to their work when they feel their employer takes their financial wellness seriously.

Increased Financial Literacy

HR can also play an educational role, helping to demystify the often-confusing world of student loans. By providing clear, accurate information — through webinars, one-on-one counseling, or curated resources — benefits teams can empower employees to make informed decisions about repayment strategies, consolidation, and forgiveness options.

That can be especially valuable for borrowers with loans in default. For example, if they’re considering enrollment in an income-driven repayment (IDR) plan, you may provide access to a student debt consultant who can help them compare the various options and choose a workable repayment plan.

Key Benefits to Consider

As HR teams explore ways to support employees with student debt, a variety of benefit options are emerging as both impactful and feasible.

Direct Student Loan Repayment Assistance

One of the most straightforward ways to assist employees is by contributing directly to their student loan payments. Under current law, employers can offer up to $5,250 annually in tax-free student loan repayment assistance through 2025. This benefit can be structured as a monthly subsidy, annual lump sum, or performance-based incentive.

Direct repayment support not only helps employees chip away at principal faster but also signals a strong commitment from employers. When paired with financial counseling or other resources, this benefit can have a highly positive impact on employee morale and financial health.

401(k) Student Loan Match

An innovative employer benefit gaining traction is matching employees’ student loan payments with contributions to their retirement accounts. Thanks to changes under the SECURE 2.0 Act that went into effect in 2024, employers can make 401(k) matching contributions based on employees’ qualified student loan payments.

This addresses the common dilemma many young workers face: choosing between paying off debt and saving for retirement. By offering both, employers can help workers build long-term financial security without sacrificing immediate obligations. It’s a win-win that encourages both debt reduction and future planning.

Recommended: Why Financial Wellness Is Important in the Workplace

Financial Education and Counseling Services

In addition to monetary support, HR can offer programs that build financial literacy and empower smarter decision-making. Partnering with financial wellness platforms or nonprofit organizations, employers can provide workshops, online tools, and access to certified counselors.

These resources can help employees:

•   Understand repayment options (e.g., income-driven repayment, refinancing, consolidation)

•   Navigate forgiveness programs (e.g., PSLF and forgiveness through IDR plans)

•   Avoid default and wage garnishment

•   Strategize for long-term financial goals alongside debt repayment

The Takeaway

As we navigate the evolving landscape of student debt in 2025, one truth is clear: employers have a powerful role to play in supporting the financial wellness of their teams. For employees burdened by uncertainty, resuming payments, and potential wage garnishments, HR support can be the difference between ongoing stress and a path to stability.

By offering thoughtful benefits — ranging from financial education to direct loan repayment and retirement matching — company leaders can foster a workplace where employees feel valued and supported.

SoFi can help. We’re experts in the student lending space. SoFi at Work offers student loan information, refinancing, and repayment platforms, along with a range of other benefits tools that can help you build a successful and loyal workforce.

Photo credit: iStock/filadendron

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2025 Social Finance, LLC. All rights reserved. Information as of November 2025 and is subject to change.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOAW-Q225-011

After graduation, the average student loan borrower has $38,375 in student loan debt, according to the Education Data Initiative. Meanwhile, the average graduate student holds significantly more — approximately $92,997.

If you’re looking for a little relief from student loan debt, one option to consider is student loan refinancing. Refinancing through a private lender may give you the opportunity to lower the interest rates on your loans and save money over the life of the loan.

However, refinancing federal loans means losing access to federal benefits, so make sure you fully understand the details about how to refinance student loans before moving forward. This student loan refinance guide has the information you need.

How Student Loan Refinancing Works

Student loan refinancing is the process of paying off your existing student loans with a new loan from a private lender. Ideally, the new loan would have a better interest rate or better terms. For example, a borrower may want to switch from a fixed rate loan to a variable rate loan or extend the term of the loan in order to lower their monthly payments. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

You might be wondering, is refinancing student loans worth it? To understand why a borrower might refinance, it helps to first understand the major components of a student loan. Every student loan is comprised of the following variables:

1.    The value of the loan (the “principal”)

2.    The interest rate on the loan

3.    The repayment period (also known as the loan’s term)

When a borrower refinances their student loan(s), they are typically looking to change either the second or third list item above, or both. Keep in mind that refinancing means forfeiting federal loan benefits such as income-based repayment plans, deferment, and forbearance.

7 Steps to to Refinance Student Loans

If you’re considering refinancing student loans, you’ll want to compare lenders and select the loan with the best interest rate and term. Once you choose a lender, you’ll apply for the loan and start making payments to the new lender.

Here’s a more in-depth look at how to refinance student loans in seven steps.

1. Should You Refinance Student Loans?

The first question you need to ask yourself is, “Should I refinance my student loans?” To answer the question, you need to know the specific types of student loans you have. Student loans come in two main varieties: federal and private.

Federal student loans are backed by the U.S. government’s Department of Education. These are the loans that borrowers apply for by filling out the Free Application for Federal Student Aid (FAFSA®) form. Private loans, on the other hand, are obtained through a bank, credit union, or online lender, and they are not backed by the U.S. government.

Determine which types of loans you have and which ones you want to refinance. Federal student loans, for example, can be consolidated into one loan with one monthly payment, known as a Direct Consolidation Loan. If you’re planning on using federal benefits, this option could be the best.

If you want to refinance private loans only or federal and private loans, you can explore a student loan refinance. Keep in mind, though, that you will lose access to federal benefits when refinancing with a private lender.

Next, ask yourself the following questions:

Am I planning on using a student loan forgiveness program?

Because refinancing is the process of paying off your existing loans with a new, private loan, you will lose access to the programs offered by federal loan programs, such as student loan forgiveness and income-driven repayment.

If you are currently working towards student loan forgiveness, you’ll probably want to think twice before refinancing your federal student loans.

Am I currently using an income-driven repayment plan?

Income-driven repayment plans that base monthly payments on discretionary income and family size are available for many federal student loans. Private loans don’t generally offer any such programs. If you need to keep your monthly payments low and have exclusively federal student loans, refinancing might not be right for you. Refinancing with a private lender eliminates your access to the federal income-based repayment plans.

Am I planning on using a forbearance or deferment program?

Both federal forbearance and student loan deferment allow the borrower to suspend their payments for a period of time and for a variety of reasons, such as economic hardship or military service. Student loan forbearance and deferment are for federal student loans only. If you think you may need this benefit in the future, it may not be in your best interest to refinance with a private lender.

Do I have a good or great financial history?

When you refinance your student loans, your lender will base your interest rate on your credit score, credit profile, debt-to-income ratio, payment history, and other financial data. If your credit score is less than ideal, you may not qualify for a lower interest rate, which could defeat the purpose of refinancing. It’s wise to be aware of where you stand credit-wise before moving forward with a refinance.

Recommended: Student Loan Consolidation vs Refinancing

2. Prepare Your Personal Financial Information

If you decide that refinancing is right for you, it’s a good idea to shop around with different lenders to check their student loan refinancing rates. Before you do that, though, you’ll want to have your basic personal financial information ready. This may include:

•   Name

•   Address

•   Total student loan debt

•   Income

•   Credit score estimate

The information a borrower needs to provide varies from lender to lender, but this gives you an idea.

3. Compare Lenders

Because student loan refinancing companies set their own rates and terms, it is important to do some shopping around. Not only will you want to get rate quotes, but you may also want to ask questions, such as:

•   Are there fees, such as origination fees?

•   Is there a prepayment penalty if I want to pay my loan off early?

•   Can the lender refinance both federal and private loans?

•   Is there a forbearance program if I am laid off from my job?

•   How do I access customer service?

•   What is the loan application timeline?

If a lender interests you, you can submit the information you gathered from Step 2. With this information, the lender will likely run a soft credit check. This should not affect your credit score, but make sure the lender guarantees it won’t.

If you meet a lender’s eligibility requirements, they’ll generally provide you with multiple offers, including offers with different term lengths and interest rates (both fixed and variable rates). This student loan refinancing calculator can help you crunch all the numbers.

4. Choose a Lender and Loan

After you’ve had the chance to review both the loan offers and the lenders themselves, it’s time to decide.

While many borrowers gravitate toward the loan with the lowest interest rate, it is worth remembering that the lowest rate might not amount to the lowest amount of total interest paid on a loan.

The longer the loan’s term, the more interest a borrower will pay. For example, if you have a loan term of 10 years, you’ll have to pay off the entire loan balance plus the interest that was accrued over the 10 years. But, if you extend your loan term 20 years, that means 10 more years of interest accruing on your loan.

Also, a loan that charges an origination fee could end up costing more than a loan with a higher rate of interest and no origination fee. Often, an origination fee is added to the balance of the loan, with the interest rate calculated on top of this new figure.

5. Gather Necessary Documents

Once you’ve chosen a lender and a loan, you’ll submit documentation that supports the information you provided during the initial rate check, as well as identifying information.

Although it will vary by lender, you’ll likely need some combination of the following:

•   Proof of citizenship

•   Social Security number

•   Paystubs, tax returns, or other income verification

•   Statements for all of the loans you are planning to refinance

If you are applying for a refinance with a cosigner, they will need to provide this information, as well.

6. Apply

Once you’ve gathered all your documentation, it’s time to apply for a refinance loan. The lender will then typically run a hard credit check and send the application through a final approval process.

A lender should inform you if any of your documentation is missing, but you may want to check back in after a few days if you haven’t heard anything.

7. Waiting for Approval

Once you’ve applied for the loan and submitted your documentation, all that’s left to do is wait for your approval. How long this process takes will depend on the lender, but it could be as short as 24 hours and as long as a couple of weeks. Check with each lender to be sure.

Once your loan is approved, consider signing up for autopay if the lender offers it. Many lenders offer a discounted rate — usually about 0.25% — for borrowers who have payments automatically deducted from their accounts.

Pros and Cons of Refinancing Student Loans

There are both pros and cons to refinancing student loans. For example, while you could receive a lower interest rate and lower monthly payment, you will lose access to federal benefits and programs.

Refinancing Student Loans With SoFi

You’ve learned how to refinance student loans and what the process entails. If you decide that refinancing is right for you, SoFi offers an easy online application, competitive rates, and flexible loan terms.

FAQ

What is the best way to refinance student loans?

The best way to refinance student loans is to shop around with different lenders to compare the rates and terms you can get. You can also ask about any fees involved, such as origination fees or prepayment penalties. Then compare the different offers you receive to decide which one is best. Besides the interest rates, consider the loan terms (a shorter term typically means higher monthly payments, and a longer term means you’ll typically pay more interest over the life of the loan), and how any fees might impact your payments.

Can I refinance both federal and private student loans together?

Yes, you can refinance federal and private student loans together. Just be aware that refinancing federal loans makes them ineligible for federal benefits like income-driven repayment plans and deferment. If you think you might need these benefits at some point, refinancing your federal loans is probably not the best option for you.

Does refinancing student loans mean the same thing as consolidating student loans?

Refinancing and consolidating student loans are similar, but they mean different things. A student loan refinance is done through a private lender and combines multiple federal and/or private loans into one loan with one monthly payment — ideally, with a lower interest rate or more favorable loan term. If you refinance federal loans, you lose access to federal benefits.

A student loan consolidation is done through the U.S. Department of Education and combines multiple federal loans into one. Your payment does not typically decrease, but you do keep access to federal benefits and streamline your monthly payments into one.

Can refinancing a student loan help to pay off debt faster?

Refinancing student loans could potentially help you pay off your student loan debt quicker. Ideally, when you refinance, you’ll reduce the amount of interest you pay and shorten the length of your loan. This allows you to pay less money in interest overall and get rid of your debt sooner. However, your monthly payments will typically be higher with a shorter loan term.

What are the downsides of refinancing student loans?

The biggest downside to refinancing federal student loans is losing access to federal benefits, such as repayment plans and forgiveness programs. However, if you are in a field that’s not eligible for forgiveness and you don’t plan on needing a deferment or forbearance, it could be worth the savings to refinance. It’s best to carefully weigh the pros and cons for your specific situation before moving forward.

To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.