When it comes to a student loan payoff plan, many people jump straight to student loan refinancing. While this can help paydown student loans fast, it can have consequences for student loan forgiveness, student loan cancellation and deferment, and other potential negative outcomes. Here are five crucial reasons NOT to refinance your student loans!

So, you are thinking of refinancing your student loans?  Maybe you should think twice about that decision, maybe you shouldn’t.  Let’s talk about some student loan refinancing!

The fact of the matter is, in many cases if your refinance your student loans, you will save a significant amount of money in interest payments over the life of your loans.

However, there are some vital details you need to be aware of before you go down that path of student loan refinancing, or making any changes to your loans in general.

When you refinance a student loan, you are not restructuring your current loans.  When you refinance, you are taking a new loan from a new private company and having that company payoff your student loans.  That company will then charge you a new, lower interest rate, on your loans.

On the surface, this sounds fantastic!  You get a new loan at a lower interest rate than you were paying before and you save money each month.  I mean, who wouldn’t want to do that?!

The problem for many people surfaces when you start listing off the many protections available for some student loans.  These protections are lost when you refinance with a new private lender, and that could be devastating to many student loan borrowers.

We will go over five crucial protections you will lose if you decide to refinance your student loans.  Take note there are WAY more than the protections mentioned in this article.

At the end of the article I will provide a tool that can analyze and decide if you fall into any of these five protections.  (The tool actually searches 130 potential solutions that may benefit you!)

If you think any of these five reasons apply to you, you should wait to refinance your student loans, and use the SLADE analysis at the end of the article to confirm if you can benefit from any potential student loan protections.

You may also be interested in reading  Stock Street’s Student Loan Debt Page

1. Loan forgiveness

If you refinance your student loans, you will lose out on the potential of student loan forgiveness.

If you have never heard of student loan forgiveness, you should really pay attention – it may be a way for you to say goodbye to your student loans before they are completely paid off!

There are different categories you may fall into in order to be eligible for student loan forgiveness.

There are options for student loan forgiveness for federal, state, and local government workers.  There are programs for doctors, nurses, lawyers, military, there are many potential student loan forgiveness solutions.

For example, there is a $17,500 teacher loan forgiveness.  This will allow a teacher working in a public school meeting certain criteria to be forgiven up to of $17,500 worth of their student loan debt.

This is only available if you have a particular type of loan, for example a PLUS loan will not qualify for this.  However, there is a different public service loan forgiveness for Parent PLUS loans.

If you have an inkling of being eligible for a program like this, you should not refinance your student loans until you confirm your eligibility.

As you can see, this is a complex subject with a lot of moving parts.  If you are interested in knowing if you personally qualify for student loan forgiveness, you can purchase the analysis at the end of the article to find out more!

2. Income driven repayment

If you refinance your student loans, you will lose out on the potential of an income driven repayment plan.

This is because when you refinance your student loans, you are getting in bed with a private company.  Private student loan companies are likely not flexible with your ability to repay them.  If you can’t repay them, they may take action against you quite quickly.

They also will likely not lower your monthly payment if you have a lack of funds to pay, lose your job, or any other number of potential problems that may occur to your household.

If you have student loans with protections, you may have the option of a REPAYE Plan, PAYE Plan, IBR Plan or an ICR plan.

These are all different plans with different potential solutions to lower your monthly payment depending on factors such as income and family size.

3. Loan cancellation

When you refinance your student loans, you walk away from the ability to benefit from a loan cancellation.  There are many random potential ways to receive loan cancellation benefits.

For example, if you had a school that closed while you were attending, you may be eligible for a Closed School Cancellation.

You may be eligible for a Death Cancellation like a Co-Sign Parent Plus – Death Cancellation.  There is even the option of a Disability Cancellation.

Again, to check if you are eligible for cancellation benefits available you can use the SLADE Analysis below to check!

4. Deferment and forbearance

Deferment of student loans refers to the ability to defer loan payments.  Student loan deferment even has the potential to prevent interest from accruing during the deferment period!  This means you will not be responsible for paying interest incurred on a student loan while it is in deferment.

Forbearance doesn’t quite have the ability to forgo the interest accrued like deferment does, but it allows the ability to not make payments for a finite amount of time without the loan defaulting.

By refinancing your student loans, you are saying goodbye to any potential to defer your student loans or to go into forbearance.

You may lose out on deferments such as the Economic Hardship Deferment Military Deferment, Internship/Residency Deferment, NAOOC Deferment, Full-Time Professional Training Deferment.

These are just a handful of potential deferment solutions available for student loans.  By refinancing a loan, you are waiving the potential deferment and forbearance options.

5. Loss of rehabilitation protection

Rehabilitation protection can be huge for anyone who has found themselves in financial hardship and been unable to pay their loans.

When a student loan borrower doesn’t pay their loans they end up in default.  If you have protections provided to your loans before refinancing, you may be able to enter a student loan rehabilitation program allowing you to get out of student loan default by making 10 monthly payments in a year for as little as $5 per payment.

A handful of the student loan rehabilitation programs include the Rehab FIS Repayment Program, Perkins Rehabilitation Program, the Rehabilitation 15% Repayment Program.

There are different rehabilitation programs available to those who have protections available to their student loans.  By refinancing your student loans, you will be waiving your potential to the rehabilitation programs in the case you default in the future.


If you believe you are eligible for any of the aforementioned programs available to those struggling with student loan debt, I highly suggest you get this SLADE Analysis before refinancing your student loans.  If you are just unsure and curious if you have any potential for any unknown student loan protection program, I still suggest this analysis.  Not only will it go over 130 potential solutions, it will also go over differnet paydown options available to you!

If you are interested, here is the form.

You may also click here to go directly to this the SLADE Analysis page. 

If you are positive you don’t fit into any of these potential protections, go ahead and try to refinance your student loans so you can lower your interest rate.

You may also like to read my student loan debt page here: Stock Street’s Student Loan Debt Page.   The page includes potential refinancing companies you may be interested in such as SoFi  and  LendKey

You may also like: Student Loan Strategies – Did you Drop out of School with a Loan?

Thanks for reading!

Disclaimer: These are the ideas and opinions of the author.  The author is not responsible for the actions of those who read the posts on this blog.  Each individual reader has a unique situation and unique needs.  This blog is not intended to solve those unique situations of the readers.  This blog is not liable for decisions made by the readers of this blog.

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