Answers about Private Student Loans and COVID-19

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Mark Kantrowitz

By Mark Kantrowitz

April 27, 2020

You’ve got questions, we’ve got answers. During our webinar about the Impact of Coronavirus on Paying for College, participants asked dozens of questions. Here are the answers to these questions about private student loans and refinancing private student loans during the coronavirus. 

How will the process for applying for private student loans be impacted? We were planning to start the process in June for the fall 2020 semester. Should we adjust our timing or how we go about looking/comparing private loans?

Private student loans are going to use the same process. Lenders of private student loans have not yet changed their credit underwriting criteria. Some mortgage lenders, however, have already adopted more stringent criteria. As far as finding a lender, we list them on, both new private student loans and refinance. We will also be releasing an objective rating system for loans soon. Most new borrowing of private student loans occurs in June, July, and August. Be sure to borrow federal first, as federal student loans are cheaper and have better repayment terms than private student loans.

If we’re on a fixed interest rate on a private loan will they adjust the rate if its lower?

No. A fixed interest rate does not change for the life of the loan. However, you can refinance a fixed-rate private student loan into a new private student loan. Given that interest rates are at historic lows, it is best for the new loan to have a fixed rate, since interest rates have nowhere to go but up. There are no prepayment penalties on federal or private student loans, so there is no cost to refinancing an old private student loan into a new private student loan.

Before refinancing your private student loan, call your current lender to tell them that you are planning to refinance with another lender. Ask if they are willing to reduce your interest rate to keep you as a customer. Most won’t, but it is worth a shot.

(If you do decide to refinance a private student loan, Credible can help you compare multiple lenders. Keep in mind refinancing federal loans results in a loss in many benefits.)

Would now be a good time to consolidate federal loans to a private lender for a low fixed rate?

It depends on the current interest rate on the federal loans and the interest rate you will get on the private student loans. The new interest rate must be lower for this to yield interest savings. Beware of comparing a fixed rate on the federal loans with a variable rate on the private loans, since variable rates may increase significantly over the life of the loan. Also, when you refinance federal loans into a private loan, you will lose the superior benefits available to federal loans, such as the payment pause and interest waiver, longer deferments and forbearances, income-driven repayment plans and various loan discharge and forgiveness options.

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own. 

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