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

 January 5, 2021
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transfer private student loans into federal

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Private Student Loan rates starting at 2.49% APR

2.49% to 13.85% 1

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2.55% to 11.44% 2

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3.25% to 13.59% 3

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  • Variable APR

Since private student loans come from private financial institutions, it’s not possible to transfer private student loans into federal ones. However, it may be possible to get some federal-like benefits on your private loan, such as forbearance if you run into financial hardship.

Keep reading to learn more about your options — specifically, we’ll 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 may wish to transfer private student loans to federal loans. But private loans are entirely separate from federal loans. Once your debt is in a private lender’s hands, it stays that way.

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

What are private loans anyway?

Although the federal government should be the first place you go for financial aid, you may need more funding than the amount you can access after filling out the Free Application for Federal Student Aid (FAFSA) each year. If that’s the case, 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 the federal government’s.

How do private student loans differ vs. federal student loans?

The U.S. Department of Education, a government agency, offers federal loans. When evaluating your application for aid, the government usually does not consider factors like your credit score. Instead, you submit a FAFSA each year, which is used to determine how much money in grants or loans you receive.

The government also sets the interest rates for federal student loans, which are often lower than those of private loans. You generally have a guaranteed grace period after graduation before needing to make payments, which allows you time to find a job with a reliable income.

Federal loans also often have unique benefits if you run into financial trouble:

  • If you cannot keep up with your bills, you can use an income-driven 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 may be forgiven if you meet specific requirements.
  • If you become unemployed, sick or decide to return to grad school, you can enter your federal loans into deferment or forbearance, which allows you to pause payments for months or years.

On the other hand, private lenders set interest rates and repayment terms. They often have stricter eligibility requirements, with credit score minimums to get a loan. If you have private loans, you generally aren’t eligible for federal benefits like income-driven repayment or forgiveness.

While federal loans have fixed interest rates, private lenders let you choose between a fixed-rate or 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 in the beginning but can fluctuate because of 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.

What federal-like benefits do private loans have?

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

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 making payments on your loans.

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

Interest-only payments

If you have trouble making your payments, some lenders will allow you to make interest-only payments on your loans. In this case, instead of paying down both the principal and interest on the loan, your payment will go only to interest. This can dramatically reduce how much you owe each month and free up money in your budget.


For those who are facing 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.

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

How do you evaluate your options?

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

Additionally, refinancing your student loans is an option if you’re having trouble managing your payments, which can help you obtain a lower interest rate or to 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 cosigner 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 now.

Rebecca Safier and Tara Mastroeni contributed to this report.

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