Private loans can be useful tools to pay for college, but they typically lack the borrower protections and benefits that federal loans provide. Because of those drawbacks, you may wonder, “can you transfer private student loans to federal?” Unfortunately, the answer is no; there is no way to convert private loans to federal loans. However, there are ways to make your repayment more manageable and payments more affordable.
The Difference Between Private and Federal Student Loans
The U.S. Department of Education issues federal loans. Congress establishes their rates and borrowing maximums. With most federal loans, there are no credit or income requirements, so you can qualify for a loan even if you aren’t working or have no credit history. Private loans are issued by private banks, credit unions, and financial institutions. While federal loans always have fixed interest rates, private loan rates can be fixed or variable. Private loan lenders look at your credit history and income to determine your eligibility; as a college student, you will likely need a co-signer to qualify for a loan.
Can Private Student Loans Be Consolidated into Federal Loans?
Can you transfer private student loans to federal loans? No, there is no way to consolidate, convert or transfer private student loans into federal ones. However, you can convert federal loans into private ones, and you can consolidate federal and private loans into one loan through student loan consolidation. Private student loan consolidation, more commonly known as student loan refinancing, can make sense if you have high-interest loans and want to save money or if you want to simplify your payments by combining your loans into one.
Differences in Benefits Offered By Federal and Private Loans
When deciding what kinds of loans to use for school, it’s important to understand the differences between federal and private loans. Federal loans include the following benefits:
- No in-school payments are required, and six-month grace periods.
- Borrowers can reduce their payments through income-driven repayment plans.
- Borrowers may qualify for loan forgiveness through Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness or other federal programs.
- Those that are experiencing financial or medical emergencies can postpone their payments through forbearance or deferment.
Private loans can have different terms than federal loans. Instead of the 10-year standard repayment plan that is the default on federal loans, private loan borrowers can choose loan terms between five and 15 years. Payments may be required while the borrower is in school, but some lenders — such as ELFI — offer reduced in-school payment options, such as interest-only repayment, fixed repayment, or deferred repayment. With private loans, you can usually borrow up to the school-certified cost of attendance. That’s very different from federal loans that have strict annual and lifetime borrowing limits. When it comes to hardship programs or payment deferments with private student loans, policies vary by lender. But private loans are never eligible for federal programs like PSLF.
| Federal | Private | |
|---|---|---|
| Interest Rate Type | Fixed | Fixed or Variable |
| Default Repayment Term | 10 Years | 5-15 Years |
| Annual Maximum | $3,500 to $20,500 (varies by year and program type) | Up to total cost of attendance |
| In-School Payments | Not required | Varies by lender; borrowers can usually opt for interest-only, fixed or deferred repayment |
Do Private Loans Offer Similar Benefits to Federal Loans?
Although private student loans aren’t eligible for federal loan benefits, some lenders offer similar programs that can make your debt more manageable. For example, ELFI offers the following perks and benefits:
- Grace periods: If you opt for a deferred repayment plan, you have a six-month grace period. You won’t have to make payments until six months after you graduate or leave school.
- Multiple in-school repayment options: You can choose from the following repayment options while you’re a student:
- Interest-only payments
- Fixed $25 monthly payments
- Deferred repayment
- Forbearance: If you cannot keep up with your payments because of a financial or medical emergency, you may be eligible for forbearance and defer your payments for up to 12 months.
Options Available When You Can’t Refinance Private Student Loans to Federal
Because you cannot convert private student loans into federal, explore these other options for managing your debt:
- Contact your lender: If you can’t afford your payments, contact your lender and explain the situation. You may be eligible for a deferment or forbearance and postpone your payments.
- Make extra payments: Making extra payments toward your private loans will reduce the amount of interest that accrues and help you become debt-free sooner.
- Refinance your loans: If you have multiple loans, you can use student loan refinancing to combine them into one and simplify your payments. You may also
Refinance Your Student Loans with ELFI
Refinancing can be an excellent way to save money. The benefits of refinancing include saving money, paying off debt faster, and lowering your monthly payments. And with ELFI, you can refinance both federal and private student loans at competitive rates. To get started, review ELFI’s student loan refinancing requirements to see if you qualify. When you’re ready, you can view your loan options online.
