Can I use a federal student loan to pay off a private student loan from a previous year?
In general, student loans are provided "to cover educational expenses." While a prior student loan presumably covered educational expenses, I don't read the regulations to allow for that, particularly if the student is no longer attending college. The available information does not seem to specifically prohibit refinancing, but it does give a list (not exhaustive) of educational expenses allowed. My understanding from that is that refinancing, particularly if a student is no longer in school, would not be allowed.
You should check directly with the banking institution from which you are seeking a loan for a definitive answer.
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Answered by: Dafna Meltzer, CPA, is with Meltzer & Meltzer CPAs in Elkins Park, Pa.