Should you roll your student loans into your mortgage?

When you combine mortgage and student loans, there are some pitfalls. Learn about the risks as well as alternatives. (iStock)

For many Americans, the coronavirus has created unprecedented financial challenges, which may make repaying your loans feel like even more of a burden. If you're trying to make debt payoff easier or otherwise looking to cut corners during these troubled times, you may be considering combining multiple debts, including a mortgage and student loans.

While it is possible to combine your mortgage and student loans into one big debt under certain circumstances, this isn't always the best option as there are some considerable risks and downsides. There are also some other alternatives for providing more flexibility in your budget

Is it smart to roll student loans into mortgage?

Usually, the process of combining your mortgage and student loans involves taking out a cash-out mortgage refinance loan and then using the proceeds to pay off your student debt. There are upsides and downsides to rolling student loans into a new mortgage.

It's up to you to decide if this is a smart move for you, given your current financial situation.

Pros of rolling student loan debt into a mortgage

  • You could end up with just one debt to pay off
  • You may be able to reduce interest rates on your student loans
  • It could lower your monthly payments
  • You can deduct the interest costs (mortgage interest is tax-deductible on loans up to $750,000)

Cons of rolling student loan debt into a mortgage

  • You risk losing student loan protections available with federal student loans
  • You put your house in jeopardy if you can't pay off your loans
  • Your home may also not appraise for enough to pay off your loans, which would mean this isn't an option for you at all
  • You could also make student loan payoff costlier, even if you drop your interest rate, as you may end up paying off the new mortgage over a much longer period of time.
  • If you don't itemize on your taxes, you won't be able to deduct mortgage interest and you'll also lose the student loan interest deduction, which you don't have to itemize to claim.


Other ways to pay off student loans

These downsides may outweigh any upsides — but there are other good options for freeing up cash during the pandemic to consider, including the following:

  1. Refinance loans
  2. Debt consolidation loans
  3. Balance transfer or 0% APR credit cards

Refinance loans

Refinance loans could help you lower your mortgage rate, your student loan interest rate, or both. You can refinance your mortgage to take advantage of today's record-low rates or could refinance your student loans with a private loan refinancing lender to do the same.

If you can qualify for a student loan refinance at a lower rate than you're currently paying, there are often no downsides to refinancing. You can use Credible to compare student loan refinancing rates from multiple private lenders at once without affecting your credit score.


You can use an online student loan refinance calculator to get an idea of how you could change your monthly payment and total loan costs by refinancing your student debt.

Rates are near record lows right now, so by securing a refinance loan, you may be able to both reduce your total interest costs over the life of your loan and make your monthly payment much more affordable by slashing your interest rate.

Visit Credible to compare mortgage rates and terms to see what type of loan you can qualify for.


Debt consolidation loans

Debt consolidation loans can be used to consolidate multiple types of debt into one.

If you secure a student loan refinance loan, you can use it to pay off multiple existing student debts. You can also consolidate other types of debts as well. For example, you could use a personal loan to pay off other high-interest loans, including credit cards and medical debt.

You can visit Credible to view debt consolidation loan options and see if they'll save you money.


Balance transfer or 0% APR credit cards

A balance transfer credit card could also allow you to reduce the interest rate on some types of debt.

If you have other credit cards at high rates, you could transfer the balances on them to a card offering a 0% promotional APR. This would substantially reduce the costs of repayment during the promotional period since every payment would reduce the principal. It's also often possible to transfer the balance from multiple cards onto one new balance transfer card, thus simplifying repayment as well as making it more affordable.

Credible's online marketplace enables you to view multiple credit card options at once so visit today to see if this could help you to get some extra wiggle room in your budget.


If one of these other approaches will work for you, you can make getting through the pandemic easier by cutting your costs without putting your home on the line by combining your mortgage and student loans.