Before you refinance your student loans...
Considering a refinance? Think through these important considerations before you jump in.
Most optometrists start their career with six-figure student loan debt. Many see refinancing as the “smart” move to make by default. The two reasons for refinancing that I hear the most are lower payments and lower interest rates. But, before you refinance your student loans, it is important to consider all factors involved.
The short answer is, if you have federal student loans and want to refinance, you’ll lose all federal forgiveness and income-driven repayment plans. If you’ve already refinanced to private loans, it is still important to consider the full impact of refinancing on your interest rate, repayment timeline and total interest paid.
Before Refinancing Federal Loans
When considering moving federal loans to a private lender, it is important to understand the federal benefits and protections you would permanently give up. Federal student loans offer income-driven repayment plans that base payments on income and family size, along with temporary payment relief through deferment or forbearance. Some private lenders offer temporary relief, but their protections aren’t the same as federal benefits.
Federal student loans also come with multiple forgiveness provisions. Depending on your repayment plan, any remaining balance may be forgiven after 20–30 years of qualifying repayment. If you work full-time for an eligible government or nonprofit employer, you may qualify for Public Service Loan Forgiveness (PSLF) after 120 qualifying monthly payments. While these timelines seem like a long time, it may be worth it if your loans are large enough where forgiveness makes sense.
Before Refinancing Private Student Loans
When considering refinancing privately held student loans, there are fewer benefits and protections to worry about losing, but you still have to be aware of the impact that a refinance can have on the total cost of the loan, total payback period and interest rates. If you lower your monthly payment by extending the repayment timeline, you could pay more total interest, even with a lower interest rate.
Case Study
An optometrist I once worked with came to me with over $400,000 in student loans from optometry school and undergraduate studies. About a year before he started working with Foresight Financial Planning, he refinanced those loans in order to secure a lower interest rate. After refinancing, he still struggled to make his large payments and wanted to explore income-driven repayment options. Unfortunately, in his eagerness to lock in a lower interest rate, he didn’t realize he was giving up federal repayment options that could have lowered his payment instead. Ultimately, he would have been a strong candidate for eventual student loan forgiveness as well.
On the other hand, I’ve also worked with clients where refinancing absolutely made the most sense. In one situation, an OD I worked with needed to get out of debt as soon as possible for various reasons. He wasn’t a good candidate for income-driven repayment or forgiveness and wanted to minimize interest paid. In his situation, there was no doubt that refinancing and extra payments were the right move for his plan.
A Word of Caution
Be careful when making student loan decisions. The landscape has changed significantly since the One Big Beautiful Bill Act passed in July 2025, and refinancing federal loans into private loans is irreversible. If you are considering a refinance, it may be helpful to talk with a student loan expert like a Certified Student Loan Professional®.
Ready to chart your course with confidence?
Feeling overwhelmed by financial decisions? Don't navigate your financial journey alone. Schedule a free introductory call with Tyler Day, founder of Foresight Financial Planning. We can discuss your specific needs and see if we're a good fit to help you reach your financial goals.
Foresight Financial Planning is a trade name of Day Financial Group, LLC, a registered investment adviser in the State of Georgia. Registration does not imply a certain level of skill or training. The information contained in this article is provided for educational and informational purposes only and should not be construed as personalized financial, investment, tax, or legal advice. Any strategies, concepts, or investments discussed may not be suitable for all individuals. All investing involves risk, including the potential loss of principal, and there is no guarantee that any specific strategy will yield positive results. Every individual's financial situation is unique. Readers are strongly encouraged to consult with their own qualified financial advisor, tax professional, or legal counsel before making any financial decisions or implementing any strategies discussed herein. Insurance product guarantees are subject to the claims-paying ability of the issuing insurance company. Please consult with a licensed insurance agent regarding your specific coverage needs. Links to third-party websites are provided for convenience and informational purposes only. We do not endorse, take responsibility for, or exercise control over the content, accuracy, or privacy practices of third-party sites.
Featured Articles
