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When a student loan payment is past due, even by just one day, it becomes a delinquent payment. For instance, if your student loan payment is due by the 15th of each month and the 16th arrives and you haven’t paid the amount you owe, you’re generally considered to be delinquent on that loan.

Once you’re late making a payment, a late fee may be assessed, and the late payments may impact your credit score.

Read on to learn more about student loan delinquency and the potential consequences, as well as ways to help prevent student loans from becoming delinquent.

How Student Loan Delinquency Impacts Your Credit Score

Late student loan payments can negatively impact a borrower’s credit score. In fact, as of the first quarter of 2025, new student loan delinquencies have reduced borrowers’ credit scores substantially, with amounts ranging from about 100 points to more than 150 points, according to a recent report from the New York Federal Reserve.

How Long Do Delinquent Student Loans Stay on Your Credit Report?

If you are delinquent on your student loans for 90 days or more, your loan servicer reports the delinquency to the national credit bureaus. Delinquent student loans appear on your credit report, and they typically remain there for up to seven years.

This can make it harder to get approved for new loans, such as a car loan or mortgage, and credit cards.

Difference Between Delinquency and Default for Student Loans

Your federal student loans are considered delinquent the first day you are late with a payment. They remain delinquent until you pay what you owe or get a deferment or forbearance to temporarily stop your loan payments.

After 270 days, if the loans are still delinquent, they go into student loan default. This means that your loans are now due in full, along with accrued interest and any fees, fines, and penalties.

To collect this amount, the government can garnish up to 15% of your pay, and/or take your tax refund to put towards the debt. They can do the same to your loan cosigner, if you have one. And your loan servicer can even sue you.

Recommended: Student Loan Default Rate

Common Causes of Student Loan Delinquency

There are a number of different causes of student loan delinquency. Some common ones include:

•   The pandemic: The Covid-19 payment pause on student loans meant borrowers were not required to make payments for several years. The pause ended in 2023, but then there was an “on-ramp” to help borrowers prepare to restart their payments until October 2024. At that point, late and missing payments were once again reported to the credit bureaus. According to the New York Federal Reserve, the delinquency rate on student loans soon returned to what it was before the pandemic, with approximately 7 million borrowers in delinquency or default.

•   Higher burden of student debt: The amount of student loan debt in the U.S. more than doubled from 2010 to 2025, and the average borrower’s federal student loan balance is currently $40,467. Large amounts of debt can be challenging to repay.

•   Accumulating interest: The interest on most student loans accrues daily. When a borrower makes a payment, most of that payment goes toward the interest that has accumulated since the last payment, and whatever is left goes to the principal. This makes it difficult for borrowers to chip away at what they owe, because interest continues to accrue on the loan principal.

•   Financial challenges: Financial hardships, such as job loss, a reduction in income, or having a number of other debts to repay, can lead to student loan delinquency.

•   Attendance at for-profit colleges: Students who attend for-profit colleges tend to take on greater student loan debt and have more trouble repaying what they owe. These borrowers are also less likely to get good jobs after graduation and often earn less.

•   Not completing a degree: Borrowers who don’t finish school and earn their degrees are more likely to struggle to repay their student loans. That may be because they earn lower wages.

Late Student Loan Payment

Being late with a student loan payment has consequences, even after just one day. Here are some of the potential ramifications you might face.

What Happens If You Miss a Student Loan Payment?

Missing a federal student loan payment makes you delinquent on your loan. After just one day, your loan is considered delinquent, and in 30 days, you may be charged late fees, depending on your loan servicer.

After 90 days, the delinquency is reported to the credit bureaus where it goes on your credit reports. After 270 days, your loan goes into default. The loans are then due immediately in full, along with interest and any fees, fines, and penalties. To collect what you owe, the government can garnish 15% of your wages and/or take your tax refund. Your loan servicer may also take you to court.

Federal vs Private Student Loan Late Payment Policies

In general, federal student loans offer more options for borrowers who are late with their payments. For example, a borrower could choose deferment or forbearance or switch to another payment plan that lowers their monthly payments, such as income-driven repayment plans. Federal student loans might also offer a loan rehabilitation program.

Policies for late payment on private student loans vary by lender, but overall, private lenders tend to have less flexibility and more stringent rules. For example, a private lender might charge you late fees and send your case to collections when you miss payments. Private lenders can also sue borrowers who stop paying their loans.

Options to Get Back on Track After a Late Payment

If you’re late with a federal student loan payment, contact your student loan servicer and let them know that you’re having trouble paying your loan. They may suggest options to help, such as forbearance or deferment, or you may be able to switch to a different payment plan that could make it easier to repay your loans, such as income-driven repayment.

If you have private student loans, contact your lender immediately to see what they might be able to do to help.

If you simply forgot about the loan payment, make it as soon as you remember. The sooner you get out of delinquency status, the better.

Can You Refinance a Delinquent Student Loan?

It may be possible to refinance a delinquent student loan, depending on the lender. If the delinquency has not yet affected your credit, you may be able to qualify for refinancing. If not, you could ask a creditworthy family member or friend to be your cosigner on the loan, which might help you qualify.

Once a loan goes into default, however, refinancing is much more challenging.

How Refinancing Can Help Prevent Future Delinquency

If you are struggling with high student loan payments, one option that may help you avoid delinquency down the road is refinancing student loans. When you refinance your loans, you exchange them for a new loan from a private lender, ideally with a lower interest rate, which reduces the amount of interest you pay over the life of the loan. Or, you might be able to lower your monthly payments by extending the term of the loan. However, you’ll pay more in interest over the life of the loan with an extended term.

A student loan refinance calculator can help you determine how much you might save to see if refinancing makes sense for you.

Just be aware that if you refinance your federal loans with a private lender, you will forfeit all of your federal benefits, including programs such as income-driven repayment plans and deferment.

Recommended: Student Loan Refinancing Guide

How to Avoid Becoming Delinquent on Student Loans

To keep from becoming delinquent on your student loans and avoid any possible consequences, here are a few steps you can take.

Setting Up Autopay and Budgeting Tips

Enrolling in autopay means your payments will be automatic so that they are always made on time, without you having to think about them. Plus, federal student loan borrowers get a 0.25% discount on their interest rate when enrolling in autopay. Many private student loan lenders offer a discount for autopay as well.

In addition, create a budget that prioritizes loan payments and stick to it. Pull together all your bills for the month along with your income. Look to see where you can cut back (such as ordering takeout less or eliminating one or two of your streaming subscriptions), and put the money you save toward your loans.

Exploring Deferment, Forbearance, and Income-Driven Repayment Plans

If you’re struggling to make your federal student loan payments, an income-driven repayment plan may help. On these plans, payments are based on a borrower’s discretionary income and family size, and often result in lower payments.

If you’re undergoing financial hardship, perhaps because of a job loss or medical emergency, you can apply for federal student loan deferment, which can postpone payments or reduce them. Borrowers with qualifying loans are not required to pay the interest that accrues.

Another option is forbearance, which also temporarily allows you to reduce or postpone loan payments. However, with forbearance, borrowers are always responsible for paying the interest that accrues.

The Takeaway

Student loan delinquency begins the first day after you miss a payment. Federal student loans generally go into default after 270 days of missed payments, potentially leading to wage garnishment and tax refund seizure. If you’re struggling to make payments, consider contacting your loan servicer or lender to discuss your options. Setting up autopay and exploring alternative repayment plans can also help you avoid delinquency.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What is considered a delinquent student loan payment?

A federal student loan is considered delinquent after just one day of missing a payment. After 90 days, the delinquency is reported to the credit bureaus and it goes on your credit report.

How long before a student loan is in default?

After 270 days of student loan delinquency, your loan goes into default. At that point, the consequences can be serious. The loan payments are due immediately in full, along with interest and any fees, fines, and penalties. The government can garnish 15% of your wages or take your tax refund to collect what you owe, and your loan servicer could take you to court.

Can delinquent student loans be removed from your credit report?

Delinquent student loans may eventually be removed from your credit report. Typically, a delinquent student loan remains on your credit report for up to seven years.

How can you fix a delinquent student loan?

If your student loan is delinquent, call your loan servicer or lender right away to see what options you might have. For instance, if you’re struggling to afford your monthly payments, you may be able to switch to an income-driven repayment plan, which is based on your discretionary income and family size and typically lowers your payments. Other possible options include deferment or forbearance to temporarily reduce or postpone your loan payments.

Does a single late student loan payment affect your credit score?

Missing just one federal student loan payment generally shouldn’t affect your credit score, as long as you make the missed payment as soon as possible. After 90 days, delinquent federal student loans are reported to the credit bureaus and go on your credit report. With private student loans, it depends on the policy of the lender, though you generally have up to 30 days before a missed payment ends up on your credit report.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOSLR-Q426-019

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As of Q1 2026, 42.6 million Americans collectively have over $1.863 trillion in student loan debt. If you are one of the millions with some form of student debt, you may have asked yourself, “Should I consolidate my student loans?”

Consolidation is a process that allows you to combine your student loans into one loan with one monthly payment. Simplifying the student loan repayment process might seem like a good idea, but there are a few things to consider before you consolidate your loans. In some cases, consolidating loans may disqualify you from certain federal student loan repayment programs and forgiveness. But other times, consolidation can allow you to lower your interest rates or shorten the amount of time it takes you to pay off your loan.

Read on to learn how student loan consolidation works, the pros and cons of the process, and when to consolidate student loans.

What Is Student Loan Consolidation?

Student loan consolidation combines some or all of your student loans into one loan and makes repayment more manageable. There are both federal and private options when it comes to consolidating your student loans.

Private Student Loan Consolidation

Private student loan consolidation is more commonly known as student loan refinancing. This is when a private lender pays off all or some of your student loan debt and creates a new loan, which you will then make payments on. Ideally, when you refinance student loans, the new loan will have a lower interest rate and a better term than your previous student loans.

With a private lender, you can combine both federal and private loans. But if you refinance your federal loans, you will lose access to federal student loan forgiveness programs, such as income-driven repayment plans. If you plan on using one of these programs now or at some point in the future, it’s best to hold off on refinancing federal loans. Instead, you could refinance just your private loans.

Federal Student Loan Consolidation

If you are hoping to consolidate your federal loans only and want to keep access to federal forgiveness programs and other federal benefits, you can consolidate with a Direct Consolidation Loan through the U.S. Department of Education.

Consolidating through the federal student loan system doesn’t usually save you money. It simply combines multiple loans into one. Your new interest rate is a weighted average of all your loans’ interest rates, rounded up to the nearest eighth of a percentage point. Should you consolidate student loans, any unpaid interest on the loans you’re consolidating will be capitalized — that is, added to the principal of the new loan.

Consolidation may be particularly useful for borrowers who are pursuing federal student loan forgiveness or who are enrolled in one of the more flexible federal student loan repayment plans, such as an income-driven repayment plan.

You can also choose to consolidate your federal loans and refinance your private loans. If you go this route, you may be able to get the possible benefits of refinancing (lower interest rates, a better term) without losing the perks of having federal loans.

Before you consolidate or refinance your loans, you should consider the pros and cons of the process. Getting clarity on whether consolidation is right for you will help you make the right decision for your financial needs.

Benefits of Consolidating Student Loans

As you’re considering when to consolidate student loans, either with a Direct Consolidation Loan or refinancing through a private lender, there are several advantages to keep in mind.

Simplified Repayment

Whether you choose a Direct Consolidation Loan or choose to refinance through a private lender, your loan repayment may be simplified. Managing multiple student loan payments might increase your chances of missing a payment. If you miss even one payment, you may risk damaging your credit score. Late payments may also stay on your credit profile for up to seven years.

Consolidating loans into one may help eliminate some of the stress of juggling multiple loan payments and may make repayment more manageable.

Fixed Interest Rate

When you refinance your loans through a private lender, your interest rate and terms will be based on your credit score, your payment history, the type of loan you’re seeking, and other financial factors. While requirements may vary by lender, applicants who meet or exceed the lender’s criteria may qualify for better interest rates and terms and save money over the life of the loan.

Borrowers can also switch from a variable to a fixed interest rate when refinancing through a private lender if they’d like a payment that stays the same every month (variable rates can fluctuate with market conditions).

With federal Direct Loan Consolidation, as mentioned earlier, a borrower’s interest rate is a weighted average of current loan rates rounded up to the nearest one-eighth of a percentage point, which means this doesn’t typically result in savings for the borrower. The borrower does, however, keep their access to federal loan forgiveness programs.

Recommended: Student Loan Consolidation Rates

Flexible Loan Terms

Student loan consolidation may allow you to change the duration of your loan. If you currently have a 10-year repayment plan, for example, you may choose to shorten or lengthen the term of your loan when you consolidate or refinance. Typically, lengthening the term of your loan will reduce your monthly student loan payment but add up to more total interest in the long run.

Recommended: Refinancing Student Loans After Consolidating

Drawbacks of Student Loan Consolidation

Even though there are benefits of student loan consolidation, there are also drawbacks. Here are a few considerations to be aware of before consolidating student loans.

You Can’t Lower Interest Rates on Federal Student Loans When Consolidating

If you choose the Direct Consolidation Loan, generally you won’t see any savings. Because your new interest rate is a weighted average of your current loans, rounded up to the nearest one-eighth of a percentage point, you will probably pay around the same amount you would have paid if you didn’t consolidate. In addition, any unpaid interest on the loan you’re consolidating will be capitalized.

If you extend your term, you may see your monthly payment decrease, but your total interest payments will increase.

However, if borrowers choose to refinance with a private lender, they may qualify for a lower interest rate, thus saving money over the term of the loan. They could also opt for lower monthly payments by extending their loan term. But they may pay more interest over the life of the loan if they refinance with an extended term.

Possible Disqualification From Federal Repayment Programs

Refinancing federal student loans with a private lender means you lose access to federal repayment programs, including the Public Service Loan Forgiveness Program (PSLF) and income-driven repayment plans.

Borrowers will also be disqualified from federal benefits such as student loan forbearance and deferment options, which allow qualifying borrowers to pause payments in the event of financial hardship.

Some private lenders may offer their own hardship programs, but policies are determined by individual lenders.

Student Loan Refinancing vs Consolidation

Consolidating or refinancing student loans are terms that are used interchangeably, but they actually apply to two different types of loans. A federal student loan consolidation is when you combine federal loans through a Direct Consolidation Loan. This is done by the U.S. Department of Education.

A student loan refinance allows you to combine private and/or federal loans into one new loan and is done by a private lender. While this does effectively “consolidate” your loans, it’s different in some important ways from federal student loan consolidation.

Below are some differences and similarities between student loan consolidation vs. refinancing.

Student Loan Refinancing vs. Consolidation
Refinance	Consolidation
It combines multiple loans into one	It combines multiple loans into one
You can refinance federal and private loans	You can only consolidate federal loans
Private refinance lenders may charge a fee	There are typically no fees
A credit check is required	No credit check is needed
Your interest rate could be lowered	The interest rate is a weighted average of prior loan rates, rounded up to nearest one-eighth of a percent
Terms can be lengthened or shortened	Terms can be lengthened or shortened
Once refinanced, federal loans will no longer qualify for federal forgiveness or repayment programs	Loans remain eligible for federal forgiveness and repayment programs
You can save money if the interest rate is lowered	Typically, this is not a money-saving option

The Takeaway

Understanding the benefits and drawbacks of student loan consolidation, as well as the difference between federal student loan consolidation and private refinancing, can help you make an informed decision about repaying student loans.

If you decide to consolidate your loans through student loan refinancing, you might want to consider evaluating a few options from different lenders, because requirements, interest rates, and loan terms can vary from lender to lender.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can your student loans still be forgiven if you consolidate them?

If you consolidate your federal student loans with a Direct Loan Consolidation, you are still eligible for federal loan forgiveness programs. However, if you choose to consolidate your federal loans through a private lender, which is known as refinancing, you will no longer be eligible for forgiveness programs and other federal student loan benefits.

When is consolidating student loans worth it?

Consolidating student loans is worth it if you’re looking to combine multiple student loan payments into one. You can use a Direct Consolidation Loan for your federal loans and keep your access to federal benefits such as income-based repayment programs or forgiveness.

Another option is to refinance your student loans through a private lender, which may give you a lower interest rate and lower monthly payment, but if you refinance federal loans, you lose access to federal benefits such as forgiveness and income-driven repayment plans.

What are some advantages of consolidating student loans?

The biggest advantage of consolidating your student loans is that you combine them into one loan so you only have one payment every month, which makes it easier to track your loans.

If you choose to refinance your loans with a private lender, you may also receive a lower interest rate, which can help you save money. But if you refinance federal loans with a private lender, you lose access to federal programs such as forgiveness and forbearance.

What types of student loans are eligible for consolidation?

The types of federal student loans eligible for consolidation through federal Direct Loan Consolidation include Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, Federal Stafford Loans from the Federal Family Education Loan (FFEL) program, FFEL PLUS Loans, and Federal Perkins Loans.

The types of student loans eligible for refinancing are federal student loans and private student loans. But refinancing federal student loans makes them ineligible for federal benefits such as income-driven repayment and federal forgiveness programs.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Federal and private student loans, like any loans, have an interest rate that impacts the total cost of the loan. So what is the average student loan interest rate? For the 2026-27 school year, federal student loan rates range from 6.52% to 9.07%, depending on the loan type, while private student loan rates vary by lender. In this guide, we’ll look at the interest rates of new federal student loans, as well as the range of rates for private student loans.

What Is the Average Student Loan Interest Rate?

The interest rate on a student loan varies based on the type of student loan. Federal student loans issued after July 1, 2006, have a fixed interest rate. The rates on newly disbursed federal student loans are determined annually by formulas specified in the Higher Education Act of 1965 (HEA).

These are the federal student loan interest rates for the 2026-27 school year:

•   6.52% for Direct Subsidized or Unsubsidized loans for undergraduates

•   8.07% for Direct Unsubsidized loans for graduate and professional students

•   9.07% for Direct PLUS loans for parents

All three of those rates have risen from the 2025-26 school year, and the undergraduate rate has more than doubled since the 2020-21 school year.

As of July 1, 2026, new graduate and professional borrowers can no longer take out Grad PLUS loans. Students who borrowed for their current program before that date may be able to keep borrowing Grad PLUS loans for a limited time.

Source: Studentaid.gov

This means that the average student loan interest rate for the three main types of federal student loans is 7.89%, based on a simple average of the three rates.

Source: Studentaid.gov

Private student loan interest rates vary by lender, and each has its own criteria for which rates borrowers qualify for. Private student loans can have either fixed interest rates that remain the same over the life of the loan, or variable rates that may start lower than a fixed interest rate but may change over time, based on market changes.

Private loans require a credit check, and lenders may offer different interest rates if you have strong credit or a cosigner on your student loan. The interest rates on private student loans can vary widely, depending on the lender, the type of loan, and on individual financial factors including the borrower’s credit history. Few borrowers qualify for the lowest advertised rates, which typically already factor in discounts such as one for enrolling in automatic payments.

Recommended: Do Student Loans Have Simple or Compound Interest?

How Are Interest Rates Determined?

As mentioned, the interest rates on federal student loans are set annually by formulas specified in the HEA. The rates are tied to the financial markets — federal law sets them based on the 10-year Treasury note and a statutory add-on percentage with a maximum rate cap.

Federal student loans first disbursed on or after July 1, 2006, have fixed interest rates. Although federal student loans are serviced by private companies or nonprofits selected by the federal government, these loan servicers have no say in the federal interest rate offered.

For private student loans, the lenders set their own rates, which may be influenced by broader market conditions. The rates quoted for student loans vary based on each applicant’s individual situation — though generally the better a potential borrower’s credit history is, the better rate they may be able to qualify for.

To learn more about private and federal student loans, check out our student loan help center.

How Student Loan Interest Is Calculated and Applied

Interest on federal student loans typically accrues daily. To calculate the interest as it accrues, the following formula can be used:

Interest amount = (outstanding student loan principal balance × interest rate factor) × days since last payment

In other words, you will multiply your outstanding loan balance by the “interest rate factor,” which is used to calculate the amount of interest that accrues on a student loan. Then, multiply that result by the days since you last made a payment.

To calculate the interest rate factor, you can divide the interest rate by the number of days in the year (365 or 365.25, depending on the servicer). For example, let’s say you have an outstanding student loan balance of $10,000, an interest rate of 4.75%, and it’s been 30 days since your last payment. Here’s how to calculate your interest:

$10,000 x (4.75%/365) = $1.30 daily interest charge

$1.30 x 30 days = $39

Interest amount $39

Many private student loans will also accrue interest on a daily basis. However, the lender ultimately sets the terms. Consider reviewing the lending agreement to confirm.

Recommended: Do Student Loans Count as Income?

How to Evaluate Student Loan Interest Rates

When you take out a federal student loan, you’ll receive a fixed interest rate. This means that your interest rate will stay the same for the term of the student loan. In addition, all of the terms, conditions, and benefits are determined by the government. Federal student loans also provide some additional perks that you may not find with private lenders, like deferment. Some deferment options won’t be available for federal loans made on or after July 1, 2027.

Private student loans can have higher interest rates and potentially fewer perks than federal student loans. You may want to take advantage of all federal student loans you qualify for before comparing private loan options.

One thing to keep in mind is that interest you pay on federal or qualifying private student loans may allow you to take the student loan interest deduction on your taxes.

What Is a Good Fixed Interest Rate for Student Loans?

The lower the interest rate, the less a borrower may owe over the life of the loan, which could help individuals as they work on other financial goals. If you’re taking out federal loans, the student loan interest rate is set by federal law, so you don’t have a choice for what is and isn’t a reasonable interest rate.

When it comes to private student loans, it may help to shop around and compare your options to find a suitable financing solution. Since every lender offers different terms, rates, and fees, getting quotes from multiple lenders may help you select an option that fits your personal needs. Keep in mind that the rate you receive on a private student loan is largely dependent on your credit score and other factors, whereas federal student loan interest rates are based on HEA formulas.

Also keep in mind that private student loans do not have the same borrower protections as federal student loans, including deferment options. Borrowers may want to consider them only after exhausting all federal aid options.

Ways to Lower Your Student Loan Interest Rate

The interest rate on federal student loans, while fixed for the life of the loan, changes from year to year for new loans. For example, the rates for Direct Subsidized and Unsubsidized loans for undergraduates more than doubled from 2.75% in 2020-21 to 6.52% in 2026–27.

To adjust the rate on an existing federal or private student loan, borrowers generally have two options. They can refinance student loans, which may lower the rate, or consolidate federal loans, which won’t.

Borrowers who refinance a federal loan with a private lender lose access to federal borrower protections such as income-driven repayment plans, federal deferment, and Public Service Loan Forgiveness.

The federal government does offer a Direct Consolidation Loan, which allows borrowers to consolidate their federal loans into a single loan. This will maintain many federal borrower protections but won’t necessarily lower the interest rate. Borrowers who consolidate on or after July 1, 2026, can only choose between the new Tiered Standard plan and the Repayment Assistance Plan (RAP). When federal loans are consolidated into a Direct Consolidation Loan, the new interest rate is a weighted average of your original federal student loans’ rates, rounded up to the nearest one-eighth of 1%.

Refinancing federal or private student loans with a private lender may allow qualifying borrowers to secure a lower interest rate or preferable loan terms. You may pay more interest over the life of the loan if you refinance with an extended term.

To see how refinancing could work for your student loans, consider using this student loan refinance calculator.

Fixed vs. Variable Interest Rates: Which Is Better?

Whether fixed or variable interest rates are better depends on a borrower’s specific situation. For many borrowers, fixed rates may be a better option because they are stable and predictable. Your payments won’t change, and you won’t have to worry about rate hikes. Borrowers may want to consider a private student loan with a fixed interest rate if interest rates are rising overall and they anticipate needing a number of years to repay their loan.

Because variable interest rates fluctuate with the market, they can be unpredictable. That means your payments can potentially change from one month to the next.

The Takeaway

The average student loan interest rate varies depending on the loan type. The interest rate for federal Direct Unsubsidized and Subsidized loans is set annually by federal law and fixed for the life of the loan.

The interest rate on private student loans is determined by a variety of factors including the borrower’s credit history and may vary widely by lender.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How often do student loan interest rates change?

The rates on federal student loans are determined and set annually by formulas specified in the Higher Education Act of 1965. Private student loan rates vary by lender, and they may be fixed or variable. Private loans with variable rates can change based on market changes.

How do federal student loan interest rates compare to private loans?

The interest rate on federal student loans is often lower than the rates for private student loans. The rate you may qualify for with a private loan depends on your circumstances. If you have strong credit or a loan cosigner who has strong credit, you may be able to get a private loan with a lower interest rate.

Keep in mind that federal student loans have fixed interest rates, which means the interest rate and your monthly payment won’t change. Private student loans may have fixed or variable rates, and variable rates can go up or down with market changes.

Can I negotiate my student loan interest rate?

Federal student loans have fixed rates that are nonnegotiable. With a private student loan, your lender may have options if you’re struggling to make payments or dealing with financial hardship, though a lower interest rate isn’t guaranteed. Consider contacting your private lender and explain the situation.

What factors determine my student loan interest rate?

Federal student loans have a fixed interest rate that is determined and set each year based on formulas specified in the Higher Education Act of 1965. With private student loans, each lender sets their own rates. Private loans require a credit check, and the interest rates vary based on an applicant’s credit and other factors. Generally speaking, the stronger a borrower’s credit is (or if they have a loan cosigner with strong credit), the lower the rate they may be able to qualify for.

Is it better to choose a fixed or variable interest rate for student loans?

For many borrowers, fixed rates may be a better option because they are stable and predictable, which means the monthly payments won’t change over the life of the loan. If you are planning to repay your loan over a period of years, you may want to consider a private student loan with a fixed interest rate.

Variable interest rates fluctuate with the market, which makes them unpredictable. As a result, your payments can go up (or down), and may be harder to budget for.

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One of the biggest student loan myths is that borrowers can’t combine federal student loans and private student loans into one refinanced loan.

It’s understandable why people may think that, since this wasn’t always an option. And consolidation through the Department of Education is only available for federal student loans.

But now you can choose to combine federal and private loans, so it’s important to know whether combining them is right for you, and if it is, how to consolidate private and federal student loans.

Can I Consolidate Federal and Private Student Loans?

If you’ve ever wondered, Can I consolidate federal and private student loans?, the answer is yes. You can combine private and federal student loans by refinancing them with a private lender.

Through this process, you apply for a new loan (which is used to pay off your original loans) and with a new, ideally lower, interest rate.

Although you are combining your loans, refinancing isn’t the same thing as federal student loan consolidation.

Key Differences Between Consolidation and Refinancing

Some people use the words “refinance” and “consolidate” interchangeably, but consolidating student loans is a different process than refinancing student loans.

Federal student loans can be consolidated into one loan by taking out a Direct Consolidation Loan from the government. To be eligible for a Direct Consolidation Loan you must have at least one Direct Loan or one Federal Family Education Loan (FFEL). Federal loan consolidation does not typically lower your interest rate. The new student loan consolidation rate is the weighted average of the interest rates of your prior loans, rounded up to the nearest ⅛ of a percent.

You can only consolidate federal student loans in this way. Private student loans are not eligible for federal loan consolidation.

When you refinance student loans, you exchange your old student loans for a new private loan. You can refinance private student loans, federal student loans, or a combination of both types. When you refinance, you may be able to get a lower interest rate, which could help you save money on interest over the life of the loan, or more favorable loan terms, if you qualify.

However, refinancing federal loans makes them ineligible for federal benefits such as deferment and income-driven-repayment plans.

Pros and Cons of Combining Federal and Private Loans

Before you combine federal and private student loans, there are a number of things to think about. Consider the following advantages and drawbacks.

Pros:

•   Combining federal and private loans may result in a lower interest rate if you qualify, which could help you save on interest over the life of the loan.

•   You may be able to lower your monthly payments through refinancing by extending the term of your loan.

•   Combining your loans can help you manage and streamline your payments since you’ll have just one loan rather than several.

Cons:

•   Combining federal and private loans through refinancing means you’ll lose federal protections such as forgiveness and deferment.

•   In order to get lower interest rates, you’ll need to have a good credit score, a stable job, and a steady income.

•   If you extend the term of the loan to lower your monthly payments, you’ll pay more interest over the life of the loan.

If you’re still debating what to do, here’s an easy decision tree to help you understand whether refinancing federal and private loans is the right option for you:

Steps to Consolidating Private and Federal Loans

If you decide that loan consolidation makes sense, here are some steps on how to consolidate private and federal student loans through refinancing.

1.    Decide which loans you want to consolidate. For instance, maybe you’d like to combine only some, but not all, of your federal loans with your private loans.

2.    Look into lenders. Private lenders that provide refinancing include banks, credit unions, and online lenders. Each one offers different rates and terms. Find out about any fees they might charge, what kind of customer service they have, and what their eligibility requirements are.

3.    Shop around. Each lender uses different criteria to determine your eligibility for a loan and the rates and terms you may get. To help find the best deal, you can prequalify with several lenders. Prequalifying involves a soft credit check, not a hard credit inquiry, so your credit score won’t be affected.

4.    Apply for refinancing. Once you’ve selected a lender, you can typically fill out a loan application online. You’ll need to provide your personal, employment, and salary information, as well as details about your private and federal student loans. Be sure to have backup documents such as pay stubs and loan paperwork readily available since you may need to provide them. The lender will do a hard credit check, which could temporarily cause your credit score to drop a few points.

5.    Find out if you’re approved. In general, you’ll learn whether you’re approved within several days. Keep an eye out for information from your new lender about the payments and due dates on the new loan.

Recommended: Student Loan Consolidation Rates

Federal Student Loan Interest Rates

Depending on loan type and disbursement date, federal student loan interest rates are reassessed annually, every July. For the 2026-2027 school year, interest rates on new federal student loans range from 6.52%-9.07%. Interest rates on federal student loans are determined by Congress and fixed for the life of the loan.

How Interest Rates Affect Consolidation and Refinancing Decisions

As noted earlier, when you apply to refinance, private lenders evaluate factors such as your credit history and credit score, as well as other personal financial factors, to determine the interest rate and terms you may qualify for.

If you were able to build credit during your time as a college student, or your income has significantly increased, you may be able to qualify for a more competitive interest rate than the rate on your current federal student loans — and perhaps any private student loans you have — when you consolidate your loans by refinancing with a private lender.

To get an idea of how much refinancing could potentially reduce the cost of interest on your loans, crunch the numbers with SoFi’s student loan refinancing calculator.

Federal Student Loan Benefits

Federal student loans come with a number of federal benefits and protections. If you refinance your federal loans, whether you’re consolidating them with private loans or not, the loans will no longer be eligible for federal benefits and protections.

Protections You May Lose When Combining Loans

Before you move ahead with refinancing, take a look at your loans to see if any of the following federal loan benefits and programs apply to you and whether you might want to take advantage of them in the future. If you think you might need any of these protections, combining loans by refinancing them likely isn’t a good solution for you.

Student Loan Forgiveness

There are a few forgiveness programs available for borrowers with federal student loans. For example, under the Public Service Loan Forgiveness Program (PSLF), your Direct Loan balance may be eligible for forgiveness after 120 qualifying, on-time payments if you’ve worked in public service for an eligible nonprofit or government organization that entire time.

Pursuing PSLF can require close attention to detail to ensure your loan payments and employer qualify for the program. The qualification requirements are clearly stated on the PSLF section of the Federal Student Aid website.

Similarly, the Teacher Loan Forgiveness Program is available for teachers who work in eligible schools that serve low-income families full-time for five consecutive years. The total amount forgiven depends on factors like the eligible borrower’s role and the subject they teach.

Income-Driven Repayment Plans

Income-driven repayment plans can ease the burden for eligible borrowers who feel that their loan payments are higher than they can afford. With income-driven repayment, monthly payments are calculated based on borrowers’ discretionary income and family size, which can lower the amount you owe each month and make your student debt more manageable. The repayment period on these plans is 20, 25, or 30 years.

Just be aware that when you lower your payments or extend your repayment term, you’ll pay more interest over time.

Deferment or Forbearance

Borrowers who are having difficulty making payments on their student loans may qualify for deferment or forbearance, two programs that allow them to temporarily pause payments on their federal student loans.

The biggest difference between them is that with forbearance, the borrower is responsible for paying the interest that accrues on the loan. Forbearance can have a major financial impact on a borrower, as any unpaid interest will be added to the original loan balance. With deferment, the borrower may or may not be responsible for paying the interest that accrues. For instance, those with Direct Subsidized Loans are not responsible for paying the accruing interest.

The Takeaway

Deciding whether to combine your federal and private student loans comes down to your financial goals. If you have a solid credit score and want to simplify payments or secure a lower interest rate, refinancing can be a smart move. Just remember that trading your federal student loans for a private loan means losing important protections such as income-driven repayment and forgiveness programs. Weigh your need for these safety nets against potential savings before making your final choice.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How does refinancing affect my credit score?

Refinancing affects your credit score because when you submit a formal loan application, the lender will check your credit score and credit history, which is known as a hard credit inquiry. That may cause your credit score to drop a few points temporarily.

Can I keep federal loan protections if I refinance?

You cannot keep federal loan protections when you refinance Refinancing federal student loans with a private lender means that you lose access to federal programs and protections such as income-driven repayment and forgiveness.

What are the risks of refinancing student loans?

One risk of refinancing federal student loans is losing access to federal programs and protections. In addition, if you extend the term of the loan through refinancing to lower your monthly payments, you’ll end up paying more interest over the life of the loan.

Is it better to consolidate or refinance student loans?

Whether it’s better to consolidate or refinance your student loans depends on your situation. If you have federal student loans and want to combine them all into one loan to streamline your payments and make them more manageable, consolidation may be the right option for you.

On the other hand, if you have private loans and your credit and financial background is strong, refinancing may help you get a lower interest rate, which could help you save money. Refinancing may also be worth considering if you have federal loans and won’t need to use any of the federal benefits they provide, and you can qualify for a lower interest rate.

What should I consider before combining federal and private student loans?

Before combining federal and private student loans through refinancing, make sure you won’t need to use any of the federal benefits that federal student loans provide, such as income-driven repayment and deferment. Remember, refinancing makes federal loans ineligible for these programs. Also, consider whether your credit and financial history is strong enough to qualify for a lower interest rate than you have on your current loans before refinancing.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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If refinancing your student loans could save you money or make your monthly loan payments more manageable, it may be time to consider a refinance. When you refinance student loans, you replace your existing loans with a new loan from a private lender. Ideally, the new loan will have better rates and terms, if you can qualify for them.

Refinancing isn’t always the right choice, however. There are times when it may not be in your favor. If you’re wondering, “Should I refinance my student loans?”, here’s what you need to know.

When to Refinance Student Loans

There are several situations in which refinancing student loans makes sense, including these instances:

You Have Private Student Loans With High Interest Rates

If you took out private student loans to help cover the cost of school and the interest you’re paying is high, refinancing may help you get a lower rate. This is especially true at times when interest rates are lower overall and/or when your financial history is solid.

If you qualify for an interest rate that’s even just a few points lower than your current rate, you could potentially save thousands of dollars. This is one example of when you might want to refinance your student loans. A student loan refinancing calculator can help you crunch the numbers to see what your specific savings might be.

Or perhaps you need to lower your monthly payment to help save money. One way to do this is to refinance your student loans with a longer loan term. This will reduce your payments, but you will end up paying more in interest over the life of the loan. You could also lower your payment by getting a lower student loan refinancing rate, if possible, and keeping the term the same.

Your Credit Score Is Good

Your eligibility to refinance student loans depends in part on your credit score. If you’ve spent time building your credit and you have a stable job, you may qualify for lower student loan refinancing rates.

You can also consider applying for a student loan refinance with a cosigner. If your cosigner has a stronger credit profile than you, you may be able to land a better rate on your refinance.

You can usually refinance student loans right after graduating, and as often as you want after that. Most lenders charge no fees to refinance.

You Have Multiple Loans

If you have several different student loans, refinancing allows you to combine them all into one loan. Basically, when you refinance, you take out a new loan, and that loan is used to pay off your existing loans. You then make payments on the new loan. It streamlines the repayment process since you have just one loan payment to make each month.

You can refinance both federal and private student loans, or a combination of both types, but be aware that refinancing federal loans with a private lender will forfeit your eligibility for federal benefits and protections.

You Qualify for Refinancing

Whether you qualify to refinance student loans depends in part on your credit score, as noted, along with your financial history, employment, and debt-to-income ratio (your monthly income vs. expenses). If you qualify and, ideally, you can get a lower interest rate, you can save money by refinancing.

You Want to Remove a Cosigner

If you have a cosigner on your student loans and you’d like to remove them, refinancing is one way to do that — as long as you have the credit and financial history to qualify to refinance on your own. To remove the cosigner, take out the refinanced loan in your own name only. The cosigner will not have any responsibility for the new loan.

You Want to Switch to Fixed Interest

If you have student loans with variable rates and you’re concerned that interest rates will rise, you may want to consider refinancing to lock in a fixed rate on the new loan.

You Are Willing to Give Up Federal Benefits

Borrowers with federal student loans need to understand that refinancing these loans into a private student loan will eliminate the ability to participate in income-driven repayment plans, Public Service Loan Forgiveness, and federal deferment and forbearance.

If you are using or plan to use these benefits, it’s not recommended to refinance your student loans. Instead, you could consider student loan consolidation vs. refinancing. A federal student loan consolidation combines multiple loans into one, with the interest rate being the weighted average of the loans you are consolidating rounded up to the nearest one-eighth of a percent.

When Not to Refinance Student Loans

Just like there are times when refinancing may be a wise choice, there are also times when it’s best not to refinance your student loans. You’ll generally want to rule out refinancing in the following situations.

You Want to Use a Federal Loan Forgiveness Program

If you have federal student loans and you’re planning on taking advantage of federal loan forgiveness programs that cancel some of your debt after you meet certain qualifications, refinancing is not the right option for you. Refinancing federal loans into a new private loan makes them ineligible for federal benefits and programs.

You Work in Public Service or Education

Borrowers working in a public service job or as a teacher or educator should think twice about refinancing. If you keep your federal student loans, you may be able to qualify for Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness. With PSLF, eligible borrowers who work in public service for a qualifying nonprofit organization or government agency may qualify for forgiveness from their remaining loan balance after making 120 qualifying payments.

With Teacher Loan Forgiveness, if you teach for five consecutive years in a low-income school or educational service agency and meet certain other qualifications, you may be eligible for forgiveness for up to $17,500 on certain federal student loans, including Direct Subsidized and Unsubsidized Loans.

Refinancing federal student loans means you lose access to these forgiveness programs.

You Need Flexible Repayment Options

If you need a payment plan that could make it easier for you to repay your federal student loans, income-driven repayment (IDR) is an option to consider. IDR plans base your payments on your discretionary income and family size. The repayment period ranges from 20 to 30 years on these plans.

There are four IDR plans borrowers can currently enroll in via an online application: the Income-Based Repayment (IBR) plan, the Repayment Assistance Plan (RAP), the Income-Contingent Repayment (ICR) plan, and the Pay As You Earn (PAYE) repayment plan. On the IBR plan, the remainder of your student loan debt may be forgiven at the end of the repayment term. Note that the ICR and PAYE repayment plans will be discontinued no later than July 1, 2028.

If you refinance student loans, you will not be eligible for IDR plans.

You Have Poor Credit

Borrowers need good credit to qualify for refinancing, and they typically require good or excellent credit to be eligible for lower interest rates. If your credit is poor, it may be wise to hold off on refinancing and work on building your credit instead. You could always refinance later, when your financial situation improves and your credit is stronger.

The Takeaway

Knowing when and when not to refinance student loans is important. Refinancing your loans can make sense if it saves you money or helps you get more favorable loan terms. But if your credit isn’t strong enough to get a lower interest rate, or you have federal student loans and want to pursue federal programs such as loan forgiveness, refinancing isn’t recommended.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can refinancing student loans reduce the cost of your total debt?

Yes, refinancing your student loans may reduce the total cost of your debt by reducing the amount of interest you pay over the life of the loan. You can do this by getting a lower interest rate (and keeping your loan term the same) and/or shortening your loan term.

What credit score do you need to refinance student loans?

The minimum credit score needed to refinance student loans varies from lender to lender, but according to FICO^®, a “good” credit score is 670 or higher. To get lower student loan refinance rates, you’ll want to have a good credit score and a low debt-to-income ratio. If you don’t meet those requirements, you may want to consider refinancing with a cosigner or waiting until you build your credit.

How do I qualify for student loan refinancing?

To qualify for student loan refinancing, you typically need strong credit, a low debt-to-income ratio, and stable employment and a steady income. Some lenders may also require you to have your degree in order to refinance. If you don’t meet the refinancing qualifications, you could add a creditworthy cosigner to your loan application or wait to refinance when your financial situation improves.

What are the benefits of refinancing student loans?

The benefits of refinancing student loans include saving money if you can qualify for a lower interest rate, making lower monthly payments if you extend your loan term, switching from a variable-rate loan to a loan with a fixed rate, and removing a cosigner from your loan if that is something you are looking to do. Just be aware that refinancing federal student loans makes them ineligible for federal programs and protections.

Can student loans be forgiven if you refinance?

No, student loans cannot be forgiven if you refinance. Refinancing federal loans into private loans makes them ineligible for forgiveness. If you have federal student loans and you would like to pursue federal loan forgiveness, refinancing is not the recommended option for you.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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