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How to Convert Private Student Loans into a Federal Student Loan

Options to convert private loans into federal loans are very limited. However, in certain circumstances, it is possible to make the conversion.

Written By: Michael P. Lux, Esq.

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Federal student loans have the best repayment plans and options for student loan forgiveness. As a result, converting private student loans into federal loans can be a really smart idea.

Unfortunately, there isn’t a simple procedure or mechanism to turn private loans into federal loans.

Borrowers that wish to turn their private debt into federal debt will have to get creative.

Why would a borrower want to turn private student loans into federal loans?

Private student loans can be brutal.

The contract signed by the borrower governs loan terms on a private loan. These terms vary from one lender to the next, but they are usually very rigid. Borrowers who struggle get little help from their lender, and late fees and collection costs add up quickly.

Federal student loans are no walk in the park, but most borrowers have a reasonable path to eliminating the debt. Federal benefits, like loan forgiveness and payments based upon what you can afford, give hope to borrowers. Even unemployed borrowers have a shot at getting rid of their federal loans.

For the vast majority of borrowers, federal student loans are far superior to private loans.

Converting private debt for borrowers still in school

The borrowers still in school have a couple of options to convert private debt into federal debt.

Many college students borrow both federal and private loans during school. Students who are careful with their spending may have extra student loan money at the end of the semester. Instead of paying back federal loans or borrowing less federal loans in the future, these students should pay down their private loans. The goal should be to maximize federal borrowing before taking on any additional private debt.

A similar approach applies to employed students. Suppose a student puts in a ton of hours at their summer job after their second year of school. This income could allow the student to borrow less money in the following year. A better approach might be to use the money to pay down existing private student loans. This student may need to borrow more federal loans the following year, but they will have less private debt.

This strategy can be especially useful for borrowers impacted by the strict borrowing limits for students just starting college. Graduate students, who have much higher federal borrowing limits, can transform vast amounts of private loans from undergrad into federal debt.

Transforming private loans into federal loans for borrowers in repayment

Borrowers can’t wave a magic wand and transform their private loans into federal loans.

However, borrowers can take small steps that slowly convert private loans into federal loans.

Suppose a borrower can afford to pay $500 per month towards their student debt. Based upon their current monthly bills, federal loans cost $300 per month, and private loans cost $200 per month.

If our hypothetical borrower hasn’t already investigated federal repayment options, the odds are that this borrower may be eligible to lower their federal payments. Let’s assume they can reduce it to $100 per month. Our hypothetical borrower can now pay $400 per month towards their private loans by lowering monthly federal loan payments. Monthly spending is the same, but by changing the repayment strategy, the borrower essentially converts $200 worth of private debt into federal debt each month.

The strategy here is pretty simple. A lower federal payment means more money to pay down private loans. Each dollar paid towards a private loan instead of a federal loan is a dollar converted.

This move won’t fix a devastating student loan nightmare. However, after months or years of repayment, it can make a borrower’s student debt far more manageable.

Next Steps

  • Sign up for income-driven repayment on federal loans – The Department of Education’s Loan Simulator is an excellent tool for exploring different monthly payment options.
  • Refinance private loans into more manageable terms – Refinancing federal loans into a private loan would be a mistake, but refinancing private loans into better private loans can help. There are many lenders to choose from and the strategy to find the best rate is fairly simple.
  • Current students should max out federal borrowing before getting any private loans – Getting federal loans starts with filling out the FAFSA, but colleges may have additional forms to complete.
About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

8 thoughts on “How to Convert Private Student Loans into a Federal Student Loan”

  1. I have FFELPS loans that were with AES and then I consolidated it (during chemotherapy) to a private loan (unknowingly) in January 2022. I never have not paid the loans except during residence when I was in forbearance. Is there any way to get them back to federal to get them paid off?

    • I wish I had better news for you, but there really isn’t a way to undo the consolidation process. When you refinanced with a private lender, the federal loans were paid in full, and a brand new loan was created.

  2. I had a pell grant and federal student loan. After graduating, I moved my loan to a low interest payment through Sallie Mae, which was later sold to Navient. How can I convert this student loan back to a federal student loan?

  3. I was told by someone at the government student loan 800 number that my loans were consolidated into a “commercial” loan but that there is a process to apply to move them back over to the Dept of Ed. Do you have info about that?

  4. My daughter has a FFLE student loan\privately owned
    She is well under income caps
    Current balance is approx 7,500.
    Since it is private,will Bidens discharge apply?
    Can it be consolidated in a federal loan and be discharged?How?


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