Federal or Private Student Loans
In most cases, paying off private student loans before federal is the stronger financial move. Private loans lack income-driven repayment, forgiveness programmes, and forbearance protections that federal loans provide. Eliminating private debt first removes the loan with the fewest safety nets. Enter your federal and private details above to see how the order changes your timeline and total cost.
New monthly payment
You pay today, so that is a month back in your pocket.
That is more than the you pay today — the shorter term costs more each month but clears the debt sooner.
- Over the whole termStay putRefinance
- Monthly payment
- Interest you pay
- Debt-free
- Total paid
No switching cost to earn back — you are ahead from the first payment, by over the life of the loan.
You earn the switching cost back after payments — around .
At these numbers the new loan never pays for itself: the monthly payment does not fall.
Careful — the lower payment comes from a longer term. Over the full term this deal costs more than staying put.
Both loans are modelled as fixed-rate, fully amortising, with no missed months. A refinance replaces your loan with a brand-new private loan — see what that costs you below.
Rate drop
Monthly change
Interest saved
Lifetime saving
What you give up when federal loans go private
- Income-driven repayment. A private lender sets one payment; it does not fall when your income does.
- Federal forgiveness programmes, including Public Service Loan Forgiveness and any income-driven forgiveness after the full repayment term.
- Federal discharge on death or total and permanent disability — private lenders decide their own policy.
- Federal deferment and forbearance rights, and the federal rehabilitation route out of default.
- The decision is one-way. Once a federal loan is refinanced privately, it cannot be turned back into a federal loan.
Refinancing private loans into a cheaper private loan gives up none of this — it is federal balances that carry the risk.
Why Private Loans Usually Deserve Priority
Federal student loans offer protections that act as built-in insurance: income-driven repayment plans cap your monthly obligation relative to earnings, forbearance and deferment pause payments during hardship, and certain programmes can eventually discharge the remaining balance. Private loans offer none of these safety nets. If you lose your job or face a medical emergency, your federal servicer has tools to help you keep your head above water; your private lender generally does not.
Even when a federal loan carries a higher interest rate, the cost of losing its protections can exceed the interest differential if you ever need them. Borrowers who are eligible for PSLF, for instance, may pay far less over time through forgiveness than they would by aggressively prepaying their federal balance. The consolidation-vs-refinance tool can help you model the federal side, while the refinance calculator tests whether a better private rate is available for the other portion.
When Paying Federal First Can Make Sense
The exception arises when your federal rate is significantly higher than your private rate and you have no realistic path to forgiveness or income-driven relief. Under the mandatory transition to the RAP plan effective 1 July 2026 under OBBBA (P.L. 119-21), some borrowers may see their federal payment amounts change. If the recalculated payment is high relative to your remaining balance, paying it down faster can save more than targeting a lower-rate private loan.
Another scenario is a small federal balance that you can clear quickly for a psychological win before turning to a larger private balance. This borrows from the snowball approach but layers in loan type as a factor. Whatever order you choose, avoid refinancing federal loans into a private product unless you have fully weighed the permanent loss of income-driven repayment, forgiveness eligibility, and federal forbearance protections. The rate-vs-balance guide helps you layer rate differences on top of this type-based decision.
This guidance assumes you hold both federal and private loans. If all your loans are one type, the payoff order decision is purely about rate versus balance.
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Sources
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Federal loan protections per studentaid.gov; OBBBA P.L. 119-21 (SAVE to RAP transition effective 1 July 2026); standard amortisation formula.
- Federal Direct Consolidation Loan interest rate — the weighted average of the loans being consolidated, rounded up to the nearest one-eighth of one percent (Federal Student Aid, studentaid.gov, Loan Consolidation).
- Amortisation, daily interest accrual and payoff arithmetic — standard loan mathematics; every figure on this page is computed from the numbers you enter.