Is It Possible to Transfer Private Student Loans Into Federal Loans?

transfer private student loans to federal

College is getting more and more expensive. With rising costs, more students are exhausting federal financial aid options, leaving them with no choice but to turn to private lenders.

Although private student loans can be useful, they don’t have as many benefits as federal aid. Many borrowers try to find a way to transfer private student loans to federal ones, but unfortunately, that isn’t possible today.

However, there are some ways to get federal-like benefits on your private loans. Find out more about private lenders and how to get similar options.

What are private loans?

Although federal loans should be the first place you look for financial assistance, sometimes you just need more help. Individual lenders and banks offer private loans to students who need extra money to pay for their education.

Private lenders set their own eligibility requirements, interest rates, and repayment terms. When you need funding to finish your degree, private loans can be a smart option to pay for school.

Private student loans vs. federal student loans

The U.S. Department of Education, a government agency, offers federal loans. When evaluating your application for aid, the government does not consider factors like your credit score. Instead, you submit a Free Application for Federal Student Aid (FAFSA) each year, which they use to determine how many grants or loans you receive.

The government sets the interest rates for federal student loans, and their rates tend to be lower than those of private loans. You also have a guaranteed grace period after graduation before you have to start making payments. This allows you time to find a job with a reliable income. In addition, federal loans often have unique benefits if you run into financial trouble.

If you cannot keep up with your payments, you can use an income-driven repayment plan, where the government caps your payments at a percentage of your income. You are also eligible for several forgiveness programs, where a portion of your debt may be forgiven if you meet specific requirements.

In addition, if you become unemployed, sick, or decide to return to grad school, you might be able to enter your federal loans into deferment or forbearance, where you can pause payments for months or years.

With private loans, the lending company sets the interest rates and repayment terms. They often have stricter eligibility requirements, with credit score minimums you need to meet to get a loan. If you have private loans, you aren’t eligible for federal benefits like income-driven repayment or forgiveness.

While federal loans have set interest rates, private lenders offer more options. You can choose between a fixed rate or variable rate loan. With a fixed rate loan, your interest rate is the same for the duration of your repayment. Variable rates are often lower than fixed ones, but they can fluctuate depending on market conditions.

With some private loans, the lender requires you to make payments right away. That can be difficult when you are still in school or job searching.

Can you transfer private student loans to federal loans?

Because private loans have different repayment terms, many people want to transfer private student loans to federal loans. However, that’s not possible. Private loans are completely separate from federal loans.

But not all lenders are the same. So before taking out a loan, compare lenders and the different repayment plans to see who offers the most generous terms.

Federal benefits from private loans

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

Grace periods

Some private companies offer grace periods, much like federal loans. These can give you six months or more after graduation to find a job without worrying about making payments on your loans.

For example, LendKey and Citizens Bank offer six-month grace periods. And College Ave gives you up to nine months before you need to make payments if your went to grad school.

Interest-only payments

If you have trouble making your payments, there are lenders that will allow you to make interest-only payments on your loans. So instead of making payments towards principal and interest, it will go only to interest.

This can dramatically reduce how much you owe each month, freeing up money in your budget. For example, LendKey allows you to make interest-only payments for up to two years if you struggle to find a job.


For those who are facing a financial hardship, such as a job loss or medical emergency, some lenders allow you to postpone your payments with forbearance. This means you can stop making payments for a period of time while you get back on your feet.

Connext is one lender that offers forbearance for borrowers struggling with their payments.

Evaluating your options

Even though you can’t transfer private student loans to federal loans, some private lenders do offer helpful benefits. Before taking out a private loan, compare lender policies to find which offers flexible repayment plans and hardship policies.

For more information on private student loans, here are the best private loans available now.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderRates (APR)Eligible Degrees 
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2.75% - 7.24%Undergrad
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2.58% - 7.26%Undergrad
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