Student loan forgiveness means that you are no longer required to pay back all or a portion of your federal student loans. Federal student loans are student loans that come directly from the federal government, and you cannot benefit from forgiveness from the federal government if you've refinanced your student loan.
If you're thinking about refinancing your student loans, we'll go over the details of how refinancing and forgiveness works so you can make the best decision for your situation.
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When you refinance a student loan, a new, private lender pays off your old loan(s) and replaces them with a new loan. A private lender may be able to replace a private or federal loan (or multiple loans). Both federal loans and private loans are converted to a new private loan - you cannot refinance to a federal student loan.
You may want to refinance student loans for several reasons, including:
It's important to understand that if you refinance your loan, you'll give up federal loan benefits. This includes income-based repayment plans (payment plans intended to be affordable based on your income and family size), deferment (a temporary pause in student loan payments where no interest accrues on your loans), and forbearance (also a temporary pause, but one during which interest may accrue on your loans).
To refinance, you can shop around with different lenders to check their interest rates and terms. You'll need to supply private lenders with your name, address, degree type, student loan debt totals, income amounts, housing costs, and more. The information you'll need to supply generally depends on individual lenders. After that, the lender will run a soft credit check. Lenders should then present you with several offers, including various terms and interest rates (both fixed and variable rates).
Before you decide on the right private lender for you, check on origination fees (the upfront charge to process an application), any prepayment penalties if you were to pay off the loan early, customer service capabilities, and the overall costs to you.
Next, you'll offer further information to your lender, including proof of citizenship, a valid ID, and pay stubs and/or tax returns. The lender will likely then run a hard credit check, and you'll go through a final approval process.
Check out our guide to student loan refinancing for a complete overview of how to refinance a student loan.
When you trade federal student loans for a refinance, you give up certain federal student loan benefits, including guaranteed postponement and income-driven repayment options.
As mentioned earlier, postponement options include deferment and forbearance. In both cases, you can contact your loan servicer for information and instructions on how to defer your loans. In most cases, you'll have to fill out a form.
Here are some details about both deferment and forbearance to understand what you'd be giving up by refinancing:
Note that the U.S. Department of Education extended COVID-19 emergency forbearance relief for student loans through the end of 2022. This emergency forbearance relief includes loan payment suspension, a 0% interest rate, and no collections on defaulted loans.
As mentioned earlier, through an income-driven repayment plan, your monthly student loan payment gets set at an amount that reflects your income and family size. You can consider four income-driven repayment plans and fill out an application to be considered for one:
Recommended: REPAYE vs PAYE: What's the Difference?
Private loans generally don't qualify for forgiveness and offer fewer protections than federal loans. However, it's worth looking into the protection and hardship options for various private lenders.
Based on a search of top private lenders, check out the table below to walk through the types of programs offered by various private student loan lenders:
Private student loans do not qualify for federal loan forgiveness. However, there are several other alternatives that you can consider through your private loan lender. Though you can't apply for income-driven repayment plans or take advantage of federal student loan forgiveness, your private loan lender can walk you through your options in order to avoid delinquency or default on your loans.
You may be wondering, 'does refinanced student loan forgiveness exist?' Since refinanced student loans turn into private loans, refinanced student loans cannot be forgiven by the federal government, one of the key differences between federal vs. private student loans.
You may have also have heard about the possibility of the Biden administration offering loan forgiveness on a wide scale and may wonder, "Will refinanced student loans be forgiven in addition to non-refinanced private loans?" Unfortunately, it would likely only apply to certain federal student loans. The administration would likely not be able to forgive the loans of private student loan borrowers or in the case of refinanced student loans.
As mentioned, it's a good idea to contact your loan servicer to calmly explain how you're having trouble making your student loans. In most cases, your lender will work with you to discuss a schedule for affordable payments.
Here are a few other options you may want to consider in this situation:
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Because refinancing student loans means converting your loan(s) to a private student loan, you'll no longer be eligible for federal forgiveness options. Now that you can answer, "Can refinance student loans be forgiven?," you can assess your options.
You cannot access the same loan forgiveness options for private student loans that you can get with federal student loan forgiveness. However, don't discount the private student loan protections you can take advantage of when you want to refinance your student loans.
Yes, you can get your federal student loans forgiven as long as you meet the eligibility requirements - but it's important to remember the key words "federal student loans." You cannot get private student loans forgiven.
For more than two years, payments on most federal student loans have been paused and interest has been set at zero, with collections suspended against defaulted federal student loan borrowers. Nothing is definite, but at the federal level, the Biden administration has made an announcement about the possibility of more student loan debt relief to come.
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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE THAT THE WHITE HOUSE HAS ANNOUNCED UP TO $20,000 OF STUDENT LOAN FORGIVENESS FOR PELL GRANT RECIPIENTS AND $10,000 FOR QUALIFYING BORROWERS WHOSE STUDENT LOANS ARE FEDERALLY HELD. ADDITIONALLY, THE FEDERAL STUDENT LOAN PAYMENT PAUSE AND INTEREST HOLIDAY HAS BEEN EXTENDED TO DEC. 31, 2022. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.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.SoFi Private Student LoansPlease borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi's eligibility and underwriting requirements. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE THAT THE WHITE HOUSE HAS ANNOUNCED UP TO $20,000 OF STUDENT LOAN FORGIVENESS FOR PELL GRANT RECIPIENTS AND $10,000 FOR QUALIFYING BORROWERS WHOSE STUDENT LOANS ARE FEDERALLY HELD. ADDITIONALLY, THE FEDERAL STUDENT LOAN PAYMENT PAUSE AND INTEREST HOLIDAY HAS BEEN EXTENDED TO DEC. 31, 2022. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE THAT THE WHITE HOUSE HAS ANNOUNCED UP TO $20,000 OF STUDENT LOAN FORGIVENESS FOR PELL GRANT RECIPIENTS AND $10,000 FOR QUALIFYING BORROWERS WHOSE STUDENT LOANS ARE FEDERALLY HELD. ADDITIONALLY, THE FEDERAL STUDENT LOAN PAYMENT PAUSE AND INTEREST HOLIDAY HAS BEEN EXTENDED TO DEC. 31, 2022. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi's eligibility and underwriting requirements. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.