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You Don’t Qualify for Student Loan Forgiveness Opportunities

If you have federal loans and could potentially qualify to have your student loans forgiven, refinancing would take that option away, including any widespread forgiveness. When you refinance your federal loans with a private lender, those loans are now a completely new loan and are now a private loan. Many public service jobs qualify for Public Service Loan Forgiveness. These include nurses, teachers, first responders, military, doctors, lawyers, veterinarians and more. There are even loan forgiveness options for volunteering. If you aren’t going to qualify for any of these opportunities, you may want to consider refinancing. 

You Aren’t Taking Advantage of Federal Loan Benefits

If you have federal loans and you refinance, there are specific benefits you will lose. These include an option for income-driven repayment plans, which limits your monthly payment to a percentage of your income and forgives the remaining balance (which is taxed) after 20 or 25 years, depending on your plan. You also lose the chance for student loan forgiveness as well as generous deferment options during times of unemployment or economic hardship.

You Want to Switch Your Type of Interest Rate (Variable or Fixed)


If you currently have variable interest rates, there’s always the chance they could increase down the road. By refinancing, you can lock in a fixed rate that won’t change based on changing economic conditions. That way you’ll know exactly how much interest you’ll be paying and won’t get caught by any surprises. 

Alternatively, if you have a fixed interest rate and are planning to rapidly pay down your student loans, you could consider switching to a variable rate. Variable rates are appealing because they are often significantly lower. However, the trouble is they could rise, even higher than whatever the fixed rate was. So variable rates could be an option if you know you are able to throw a lot of extra money at your loans to eliminate them fast, like this couple that wiped out more than $100,000 in student loans. Otherwise, it could be a risk.

You Want to Streamline Payments 


Another scenario where it makes sense is when you’re currently making multiple payments to different lenders. By refinancing, you can combine payments into one monthly payment. As a result, you won’t have to deal with the hassle of ensuring multiple lenders are paid on time. Instead, you only have to concern yourself with one, which can simplify your life. This can also help reduce late payments.

Before you refinance your student loans, really understand your current and prospective situation and understand your student loans. Compare lenders for refinancing to see who is right for you.

Credible allows you to compare rates from 10 lenders without impacting your credit for free. Splash Financial is a student loan refinance marketplace that matches you with a lender with a low interest rate.

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At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own. 


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