Using a home equity loan to refinance your federal or private student loans has its pros and cons. For student loan borrowers with equity in their homes, it may seem like a great deal to take the outstanding student loan debt but there may be hidden consequences.\r\n\r\nBefore taking out a home equity loan, consider refinancing your student loans with a private lender and see what rate and terms are offered. For federal student loans, consider consolidating your federal loans and speak with your servicer to reduce payments through financial hardship programs offered as part of federal consolidation loan programs. If you have both federal and private student loans, you may benefit from refinancing both loan types into one loan. Many private lenders offer additional benefits with a student loan refinance.\r\n\r\nThe options above may help you lower your interest rates or monthly payments before you tap into your home's equity.\r\n\r\nThings to consider before using your home equity for student loan refinancing:\r\n\r\n \tA tax benefit. There may be an impact on your taxes that is more favorable than the student loan interest tax deduction. Consult with a tax advisor for your unique situation.\r\n \tLower interest cost. Your student loans may have a higher interest rate than a home equity or vice versa. Consider what your rates will be with a student loan refinance or federal loan consolidation and compare that with the home equity interest rate and terms.\r\n \tYou increase the risk of losing your home. If you refinance your student loans into a home equity loan and don't make payments you risk losing your home through foreclosure. Although interest rates for some home equity loans may be lower, that may not be the case for all circumstances.\r\n \tYou lose repayment options and forgiveness benefits on federal loans. if you decide to roll your federal student loans into home equity, you lose financial hardship benefits as mentioned above. These benefits can lower your monthly payments based on your income or defer payments for extreme financial situations.\r\n \tUsing home equity may cost you more. Take a look at all the costs associated with using home equity to roll your student loans into because it may include additional fees or prepayment clauses. In some cases, you may be extending payments from 10 to 30 years increasing the interest payments and total cost.\r\n\r\nEveryone's situation is unique and home equity refinance may be the best option given your situation. It is in your best interest to understand your refinancing options, the tax benefits, employment stability, and overall financial health before considering tapping into your home equity.