Should Lawyers Refinance Their Student Loans?

Student loan payments will begin again for many lawyers. For many, these payments represent a significant monthly cost. To reduce how much they will pay, many lawyers consider privately refinancing their student loans. While this may result in a lower monthly payment, there are trade-offs lawyers should be aware of, including not being eligible for student loan forgiveness, losing flexibility to change repayment plans, and more severe consequences for missing payments.

The average lawyer graduates owing over $100,000 in student loans with interest rates typically between 5-7%. Over a standard ten-year repayment, these rates can lead to monthly payments over $1,000 and tens of thousands of dollars more paid over the life of the loan. So it makes sense to consider refinancing — but is it the right choice for young lawyers?

What is a private refinance?

When you privately refinance federal student loans, a new lender pays off your entire current balance and issues a new loan reflecting the refinancing agreement's terms. You don't have to refinance all of your loans — you can decide how much to refinance, leaving smaller or lower-rate loans as federal loans if you prefer. Standard federal repayment terms run 10-30 years; privately refinanced loans typically range from 5-25 years, with shorter terms carrying higher monthly payments but lower total interest paid.

Benefits of a private refinance

Lower interest rates. Average borrowers can reduce their interest rate by more than 2%, which can save thousands over the life of a loan. A $150,000 loan refinanced from 6% to 4% over ten years can save roughly $150/month and about $17,500 in total interest.

One monthly payment. Refinancing consolidates multiple loans from college and law school into a single loan and payment.

Fixed vs. variable rates. Federal loans are always fixed. Private refinancing lets you choose fixed or variable — variable rates start lower but can rise over time, and work best for borrowers planning to pay off the loan quickly.

Cons of privately refinancing

Losing federal forgiveness eligibility. Once refinanced, you're no longer eligible for federal payment freezes or programs like PSLF or general federal forgiveness.

Losing flexible repayment options. Federal loans let you switch between standard, income-based, and extended repayment plans. Once you refinance privately, you cannot change loan terms without refinancing again, and you can't switch back to a federal loan.

Fewer options during hardship. Federal loans offer deferment and forbearance during financial difficulty. Private loans generally don't, and missing a payment can trigger an acceleration clause requiring the entire balance immediately. Loans refinanced with a co-signer may also include a death-and-bankruptcy clause making the full balance due if the co-signer dies or goes bankrupt — always check for this clause and ask to have it removed if possible.

Career flexibility considerations. Lawyers with high turnover risk (especially in BigLaw) should either wait a year or two before refinancing, or build up a larger emergency fund to cover payments if they leave a job. Lawyers who plan to eventually move to non-profit or public interest work should weigh whether locking into a private refinance now could make that transition harder later.

Lawyers should not feel stuck at a job they dislike because of student loans — but privately refinanced loans make that scenario more likely.

The decision to privately refinance is not always straightforward. If you would like a CFP® professional to analyze your student loan options and provide recommendations, schedule a free Meet & Confer. Developing Financial offers both one-time student loan repayment analysis and ongoing financial planning that includes student loan repayment recommendations.