Question: I am fortunate to have paid off all of my undergrad loans, but have taken out significant loans for graduate school, which I just finished in December. My loans are all federal loans which are mostly at 6.7%, with a small amount at 8.9%.

I am just about to start paying back those loans, and was wondering — are there any banks who would take on my school loans, and give me a lower interest rate? Liz, San Francisco, CA

Answer: I wouldn’t recommend making the loan switch even if you could find a lower rate personal loan at a bank. Yes, a lower-rate bank loan would save you some money on interest rate payments, but in return you would be giving up a lot of financial flexibility.

For instance, if you decide to enter a low paying career or you end up making little money like so many graduates today you can pick a repayment option that reflects a low percentage of your income. Alternatively you can stretch out your payments if your finances take a turn for the worse. Under certain circumstances federal loans can be forgiven for graduates who go into teaching, health, public service, and a number of other service-oriented fields. These are only a few advantages of federal student loans.

The rate on your loans is pretty good, too. It won’t be easy to find a bank loan that charges you less. For example, I quickly checked at bankrate.com on personal loans and the rates are higher than your student loan rates.

The one advantage to making the switch with the scenario you described–taking out a consumer loan to pay off your student loans and then pay off that loan–is that you could discharge the loan in bankruptcy in a financial pinch. You can’t shed student loans in bankruptcy. I’d still opt for the repayment flexibility of the student loans.