Private Student Loan Refinancing Could Cost Borrowers Federal Benefits, CFPB Says

Refinancing results in the loss of important federal protections, the agency says.

Students study in the Perry-Castaneda Library at the University of Texas at Austin, on Feb. 22, 2024. Brandon Bell/Getty Images

With the Federal Reserve lowering interest rates and further cuts anticipated, some federal student loan borrowers are considering refinancing. However, the Consumer Financial Protection Bureau (CFPB) is advising borrowers to use caution and carefully weigh the tradeoffs.

In a report published on Nov. 16, the CFPB said some private lenders are using “deceptive” marketing tactics that mislead borrowers about a critical downside of refinancing: the loss of access to federal student-loan forgiveness options.