Can you transfer private student loans to federal loans?

Since private student loans originate from private financial institutions, it is not possible to transfer private student loans into federal loans. However, it may be possible to obtain federal-type benefits on your private loan, such as a forbearance if you are having financial difficulties.

Read on to learn more about your options. More specifically, we will try to answer the following questions:

Can you transfer private student loans to federal loans?

Since private loans don’t offer as many benefits, you might want to transfer private student loans to federal loans. But private loans are entirely separate from federal loans. Once your debt is in the hands of a private lender, it stays that way.

But some private lenders can offer similar benefits to federal loan programs. Every lender is different, so before taking out a private student loan, be sure to compare lenders and their different repayment plans to see which offers the most generous terms.

What are private loans anyway?

Although the federal government should be the first place to go for financial assistance, you may need more funding than the amount you can access after completing the form. Free application for Federal Student Aid (FAFSA) each year. If so, individual lenders and banks offer private loans to students who need extra money to pay for their education.

When you need funding for your degree, private loans can be a smart option. But be aware that private lenders set their own eligibility requirements, interest rates, and repayment terms, which are separate from those of the federal government.

How are private student loans different from federal student loans?

The US Department of Education, a government agency, offers federal loans. When assessing your request for help, the government usually does not take into account factors such as your credit score. Instead, you submit an FAFSA each year, which is used to determine the amount of grants or loans you receive.

The government also sets the federal student loan interest rates, which are often lower than private loans. You usually have a guaranteed grace period after graduation before you need to make any payments, giving you time to find a job with a reliable income.

Federal loans also often have unique advantages if you are having financial problems:

  • If you can’t pay your bills, you can use an income-based repayment plan, which caps payments at a percentage of your income.
  • You are also eligible for forgiveness programs, in which a portion of your debt can be forgiven if you meet specific requirements.
  • If you become unemployed, ill, or decide to return to graduate school, you can foreclose or withhold your federal loans, allowing you to withhold payments for months or years.

On the other hand, private lenders set interest rates and repayment terms. They often have more stringent eligibility requirements, with minimum credit points to obtain a loan. If you have private loans, you are generally not eligible for federal benefits such as income-tested repayment or forgiveness.

While federal loans have fixed interest rates, private lenders allow you to choose between a fixed rate or a variable rate loan. With a fixed rate loan, your interest rate stays the same for the duration of your repayment. Variable rates are often lower than fixed rates initially but can fluctuate due to market conditions.

With some private loans, the lender requires you to make payments immediately. This can be difficult when you are still in school or looking for a job.

What Federal-Style Advantages Do Private Loans Have?

Some lenders offer private loans with similar benefits to federal loans. Here are a few that you can benefit from:

Grace periods

Many private companies offer grace periods, much like federal loans. These can give you up to six months or more after graduation to find a job without worrying about paying off your loans.

For example, LendKey, College Ave, and Citizens Bank offer six-month grace periods.

Interest payments only

If you’re having trouble making your payments, some lenders will allow you to pay only the interest on your loans. In this case, instead of repaying both the principal and the interest on the loan, your payment will go to interest only. This can drastically reduce the amount you owe each month and free up money in your budget.


For those facing financial difficulties, such as a job loss or a medical emergency, some lenders allow you to defer your payments with forbearance. This means that you can stop making payments for a while while you get back on your feet.

Earnest is a lender that offers forbearance to borrowers struggling with their payments.

How do you assess your options?

Even if you cannot transfer private student loans to federal loans, some private lenders offer valuable benefits. Before taking out a private loan, compare the policies of lenders to find those that offer flexible repayment plans and hardship policies.

Besides, refinancing your student loans is an option if you’re having trouble managing your payments, which can help you get a lower interest rate or consolidate all of your debt into one monthly payment. Eligibility for refinancing depends on financial factors, including your credit score and income, and you can use a co-signer if you don’t qualify on your own.

For more information on private student loans, here is our list of some of the best private loans available today.

Rebecca Safier and Tara Mastroeni contributed to this report.

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