Frequently Asked Questions

Student loan refinancing replaces your existing loans with a new loan from a private lender, ideally at a lower interest rate. This can reduce your monthly payment and total interest paid. However, refinancing federal loans means losing federal protections like income-driven repayment and Public Service Loan Forgiveness.

Consider refinancing federal loans only if you have private loans to refinance as well, don't plan to use PSLF or income-driven repayment, have good credit (670+), and can get a significantly lower rate. Federal loans offer unique protections that private loans don't provide.

Most lenders require a minimum credit score of 660-680. For the best rates, aim for 720 or higher. If your score is lower, consider adding a creditworthy cosigner to your application.

Savings depend on your current rate, new rate, and loan balance. On average, borrowers who refinance reduce their rate by 1-2%. For a $35,000 loan, reducing your rate from 6.8% to 4.5% could save $3,000-$5,000 over the loan term.

Both allow you to temporarily pause payments. Deferment is often available if you're in school, unemployed, or experiencing economic hardship—interest may not accrue on subsidized loans. Forbearance is typically for financial hardship and interest continues accruing on all loans.

PSLF forgives the remaining balance on federal Direct Loans after you make 120 qualifying monthly payments while working full-time for a qualifying employer (government or nonprofit). You must be on an income-driven repayment plan to maximize forgiveness.

Income-driven plans cap your monthly payment at 10-20% of your discretionary income and extend your repayment term to 20-25 years. Any remaining balance may be forgiven after the repayment period. Plans include IBR, PAYE, REPAYE, and SAVE.

Yes, both federal and private student loans can be paid off early without prepayment penalties. Making extra payments reduces your principal balance and total interest paid. Even small additional payments can significantly shorten your repayment timeline.

Yes, you can deduct up to $2,500 in student loan interest per year on your federal tax return. The deduction phases out at higher income levels. You don't need to itemize to claim this deduction—it's an above-the-line adjustment to income.

Default occurs after 270 days of missed payments for federal loans (varies for private). Consequences include damage to your credit, wage garnishment, tax refund seizure, loss of eligibility for deferment/forbearance, and collection fees. Contact your servicer immediately if you're struggling to make payments.