Can you consolidate private student loans into federal

There are two main types of student loans available to pay for college: federal student loans offered by the government and private student loans offered by private banks and lenders.

Federal student loans typically have lower interest rates and more protections for borrowers, so they are usually the preferred choice between the two.

If you have private student loans, you may be wondering if you can transfer them to federal student loans.

Unfortunately, this isn’t possible. You can only convert federal student loans to private loans through refinancing, but not the other way around.

Benefits of Federal Student Loans vs. Private Student Loans

Federal student loans come with certain benefits that private student loans lack.

First, federal student loans are eligible for loan forgiveness through a variety of public service employment programs. Private lenders do not offer student loan forgiveness to borrowers.

Second, federal student loans have unique repayment options that aren’t available for private student loans. For example, federal loans can be deferred for six months after graduation which isn’t offered by many private lenders (there are exceptions).

Federal loans also allow borrowers to choose between a standard ten-year repayment plan, a graduated repayment plan, and income-driven repayment plans. The latter two plans usually result in lower monthly payments which aren’t available among many private lenders (save for a few exceptions).

Third, students usually get better interest rates on federal loans than they do on private student loans. Lenders offer private student loans at an interest rate based on the credit history and risk of the borrower. Since the U.S. government guarantees federal student loans, borrowers can enjoy relatively low, fixed rates.

>> Read More: Differences Between Federal and Private Student Loans

Challenges of Converting Private Student Loans to Federal Student Loans

Now that you know all about federal student loan benefits, it’s time to answer the main question. In short, private student loans cannot be converted to federal loans.

Why? There are currently no options for converting a private loan to the federal sector.

In the student loan space, there are several places that let you refinance student loans, but none of them allow you to transfer private student loans to federal loans.

The federal government offers a federal consolidation loan program that allows borrowers to combine their student loans into one payment. But only federal student loans are eligible for this program.

Additionally, you are able to get a refinance loan in the private sector which allows you to consolidate student loans. While both federal and private student loans are eligible, this move transitions your debt to the private sector, away from any federal benefits.

Private Lenders That Offer Federal Student Loan-Like Features

Even though you cannot transfer private student loans to federal student loans, there are some private lenders who offer benefits that are similar to those of federal student loans. Here are a few benefits as well as the lenders that offer them:

Financial Hardship Options

If borrowers are having trouble finding work or are facing financial hardship, some private lenders allow borrowers to make only interest payments on their loans for up to two years. LendKey offers this benefit.

Defer Payments While in School

Many private student loans require that students make interest payments on their loans while they are still attending school full time.

Lenders such as College Ave and Earnest, however, give students the option of deferring their payments until at least six months after they are no longer full-time college students. 

Many lenders also allow you to defer payments for things such as going back to school or entering the military.

Flexible Repayment Options

One of the most desirable benefits of federal student loans is the option to select different repayment plans.

Students who borrow from College Ave have the option to choose a graduated repayment plan in which they pay only interest for up to two years after they finish college. After two years, full interest and principal payments begin.

Earnest allows borrowers to choose among a variety of repayment terms, skip one payment per month, and set up biweekly automatic payments.

Consolidation vs refinancing

With a Direct Consolidation Loan, you can consolidate multiple federal student loans into one loan with a fixed interest rate that’s a weighted average of your loans’ various interest rates rounded up to the nearest one-eighth of one percent.1 You won’t necessarily get a lower interest rate with consolidation, but you’ll have the convenience of making just one payment.

You can consolidate most federal education loans through StudentLoans.gov, and private student loans through some private lenders. However, you can’t consolidate both federal and private loans through the federal program.1

Refinancing occurs when a company buys all your current student loans and issues you a new loan to pay them all off. You’ll get a new rate but you may lose payment flexibility and special benefits that were available through the individual lenders or the government.

We don’t offer consolidation or refinancing at this time. We recommend that you consider the impact that these actions may have on your student loan benefits and Total Loan Cost.

Questions to answer before consolidating or refinancing student loans

You may want to make a single, lower monthly payment; however, before you decide to consolidate or refinance, you should consider the pros and cons of each option. Answer these questions before you act:

• Are you saving money or are you just paying over a longer term, so you’ll end up paying more over the life of your loans?
• Will you lose any current student loan benefits, such as repayment options or Public Service Loan Forgiveness?
• Is your credit score sufficient for a lender to approve you for a consolidation or refinancing?
• Will your new loan be considered a student loan or a personal loan? If it’s not a student loan, will you lose out on an interest tax benefit?
• Will you have to pay any service fees to refinance your student loans?
• Will you lose any discounts that you’ve had with your loan originator?

Can you change private loans to federal?

Can private student loans be forgiven?

How do I get rid of private student loans?

What student loans Cannot be consolidated?