What to Do If You Regret Consolidating or Refinancing Your Student Loans

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Student loan consolidation and refinancing are supposed to be boons to your repayment, providing you either the lower monthly payment or reduced interest you desire.

But if you sought the rewards without considering the risks, you might already be regretting your decision to consolidate or refinance your debt.

Unfortunately, these measures are almost always irreversible once complete. Still, you could problem-solve your way out of a regrettable situation.

When it’s not too late to undo consolidation or refinancing

Consolidating your student loans with the federal government is different from refinancing them with a private lender. But one commonality between the loan management strategies is that it’s usually impossible to nix your decision.

Can you cancel your consolidated loan?

A direct consolidation loan groups your federal loans into one new debt with a weighted interest rate. It could help you switch to a fixed rate, choose a new loan servicer and even cap your monthly payments via newly eligible repayment plans.

After applying for consolidation, you should receive a notice from the U.S. Department of Education giving you an opportunity to confirm which loans you want to consolidate. (If your regret is simply not including all your federal loans on your application, you have up to 180 days after your consolidation loan is made to add other eligible debt.)

The only gray area could be the amount of time it takes for your old loans to be paid off and transitioned into new debt. If you haven’t heard from your new consolidation servicer, it might not be too late. Contact the servicer as soon as possible to see if you beat the deadline.

Once your consolidation is done, however, it’s done. The loans that you consolidated were already paid off and, as a result, no longer exist.

You’d have more leeway if you indicated on your consolidation application that you wanted to delay the loan’s processing until after the completion of your grace period. But once your grace period expired, you’d likely be out of luck.

Can you cancel your refinanced loan?

Like with consolidation, refinancing pays off your old loans and creates a new one.

Believe it or not, there’s more of a reprieve in this process when working with some banks, credit unions and online lenders.

Once you’ve refinanced, you might still be able to undo it — if you act quickly. Here are some examples of lenders that offer a quick, escrow-like period after you sign your loan agreement:

Beating the clock — canceling with CommonBond in nine days, for example — would help you reset your student loan situation.

If you’re unsure about your refinancing lender’s “right to cancel” policy, review the promissory note you signed. Also, seek clarification via customer service.

If it’s too late revert your refinanced loan, you could refinance again with the same (or another) company.

Of course, refinancing yet again might not solve your problem.

What to do when it’s too late to undo consolidation or refinancing

Although it might be past the point for a do-over on your newly consolidated or refinanced education debt, you could find ways to improve your new reality.

Start by asking yourself why you regret the decision. That explanation should lead to the best next step for your repayment.

Decision Reason for Regret Possible Solutions
Consolidation Hating your new loan servicer Either complain to the Federal Student Aid Ombudsman Group or, if you have another eligible loan, consolidate a second time with a new servicer
Consolidation Paying more interest over time on your new income-driven repayment (IDR) plan Either switch repayment plans (for free) or make extra payments whenever possible
Consolidation Losing progress toward Public Service Loan Forgiveness or cancellation at the end of an IDR term Survey other student loan forgiveness programs offered by the federal and state governments, as well as employers, that won’t penalize you for consolidating
Refinancing Despising your new lender Refinance a second time with a new bank, credit union or online lender with a stronger customer service record
Refinancing Choosing a variable interest rate Refinance again, choosing a fixed rate this time
Refinancing Missing federal loan protections such as forbearance and IDR Ask your refinancing company about the safeguards it offers, as some lenders offer the chance to pause or reduce payments, albeit in a more limited fashion

Before enacting a new solution for your consolidation or refinancing regret, double-check that it’s the right measure to take.

If you’re stuck with a variable interest rate on your newly refinanced debt, for example, don’t jump at the first fixed-rate offer from a refinancing competitor. Take the time to shop around for the lowest possible fixed rate, taking a break from the search — if necessary — to improve your credit or find a willing cosigner.

You’d also be wise to calculate the cost of your repayment under the new rate to ensure it won’t be more expensive than sticking with your current variable rate.

For every repayment problem — whatever yours is — there’s a solution. To find it, you might have to reset your student loan expectations.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.