- All new federal student loans have fixed interest rates. Private loans may have variable rates that can reset every month or quarter, according to the CFPB.
- The CFPB says federal loans usually carry more flexible protections if you have trouble repaying. Private lenders are not required to offer you any relief.
- Federal income-driven repayment plans base your payment on your income and household size, and the CFPB says you could pay as little as $0 a month.
- Refinancing federal loans into a private loan can lower your rate, but you lose the flexible repayment options and borrower protections.
Interest rates
The CFPB says all new federal student loans have fixed interest rates, meaning the rate does not change over the life of the loan. Private loans may have variable rates that can reset every month or quarter, which changes your payment. The CFPB notes that repaying over 10 or more years raises the risk of a rate increase, which matters most for variable-rate loans.
Repayment help
| Federal loans | Private loans | |
|---|---|---|
| Relief | Usually more flexible protections if you run into difficulty repaying. | Private lenders are not required to offer you any relief, so you may need to show what you can pay with bank statements and bills. |
| Income-driven repayment | Plans base your payment on your income and household size. You could pay as little as $0 per month. | Not described on the CFPB page. |
| Pausing payments | Forbearance temporarily pauses or postpones payments. Check whether interest keeps accruing and whether it is capitalized when it ends. | You can ask your servicer for a lower payment by letter, email or phone. Ask about sign-up fees, how long it lasts and the extra interest it adds. |
The CFPB recommends the Education Department’s Loan Simulator for comparing federal repayment plans.
Forgiveness
The CFPB’s repayment page mentions Public Service Loan Forgiveness for people who are in the military or who work for a government or nonprofit organization. It says federal forgiveness programs generally depend on your choice of career or employer.
What you lose by refinancing federal loans
Refinancing federal loans into a private loan may get you a lower interest rate. The CFPB’s warning is plain: you will lose the flexible repayment options and borrower protections that federal student loans offer.
Which to use first
The CFPB advises using up your federal loan options before taking private loans. It says private loans may be better only in rare cases for graduate or professional students, such as those with high job-placement certainty, a very high credit score, substantially lower rates and a plan to repay within a few years. It recommends talking with your school’s financial aid office. If a student loan ever reaches collection, see what debt collectors can and cannot do.
For private loans, the CFPB’s practical advice is to get quotes from at least three different providers. For federal loan questions, the Federal Student Aid Information Center is at 1-800-433-3243.
Frequently asked questions
Are federal student loan interest rates fixed?
The CFPB says all new federal student loans have fixed interest rates, so the rate does not change over the life of the loan.
Can private student loans have variable rates?
Yes. The CFPB says private loans may have variable rates that can reset every month or quarter.
What help do I get if I cannot pay?
The CFPB says federal loans usually have more flexible protections, including income-driven plans that could be as low as $0 a month. Private lenders are not required to offer relief.
What do I lose if I refinance federal loans into a private loan?
The CFPB says you lose the flexible repayment options and borrower protections that federal student loans offer, even if you get a lower rate.
Which should I take first?
The CFPB advises maxing out federal loan options before taking private loans, with limited exceptions for some graduate and professional students.
Sources
- CFPB: What student loan option is best for me: federal student loans or private student loans? (last reviewed May 14, 2024)
- CFPB: Options for repaying your federal and private student loans (page last modified September 6, 2024)
- CFPB: Student loan options and who to contact (last reviewed May 14, 2024)
Each source was opened and read on October 26, 2026. See how we verify.