Income-Driven Repayment vs Refinance
**Income-driven repayment (IDR)** caps federal loan payments to income and may lead to forgiveness after 20-25 years. **Private refinance** lowers APR for creditworthy borrowers but forfeits federal protections.
Step by step
1. List federal vs private
Only federal loans qualify for IDR and PSLF.
2. Compare effective APR
IDR payment can be below interest accrual—balance may grow.
3. Job stability
Refinance is irreversible—loss of deferment and forbearance.
IDR vs refinance
Public sector and nonprofit workers often need IDR for PSLF.
- IDR: Payment tied to income; forgiveness path; taxable forgiveness possible.
- Refinance: Lower rate if qualified; no federal safety nets.
Use our calculators
Common mistakes
- Refinancing federal loans before PSLF count
- Missing annual IDR recertification
FAQ
Can I refinance federal loans?
Through private lenders yes—but they become private debt.