The ability to refinance student loans is a big topic right now. Currently, there are no options to refinance federal student loans at lower interest rates while remaining in the federal student aid system (which I believe is problematic). There are an increasing number of private student loan refinancing options available, but these programs are generally geared towards high-income borrowers and carry their own set of risks and concerns.

SoFi, one of the major new private student loan refinancing companies, recently announced a new refinancing program involving mortgages. Specifically, SoFi has partnered with Fannie Mae to offer a mortgage refinancing program that can also be used to refinance student loan debt. In other words, borrowers who own a home could potentially take out a new mortgage at a lower interest rate to pay off their current mortgage and their student loan debt, too.

This student loan-mortgage combo refinancing package has some clear benefits. First of all, because a mortgage is a “secured” debt (meaning the debt is backed by an asset – in this case, a home), there is less risk to the lender, and so they are willing to offer a lower interest rate. Furthermore, mortgage interest rates are at historic lows at the moment. So homeowners can take advantage of the current interest rate environment to lower their rates on both their mortgage debt and their student loan debt. Depending on the borrower, this could lead to substantial savings.

However, this type of refinancing product also carries some risk. First of all, if borrowers are refinancing federal student loans into any type of private student loan, they may forever lose out on the unique consumer protections offered by the federal student loan system such as income-driven repayment, profession-based loan forgiveness, and discharges upon death or disability. Even more problematic, however, is the fact that with this specific type of refinancing product, borrowers would be turning an “unsecured” debt (a student loan not backed by any asset) into a “secured” debt (a mortgage backed by the borrower’s home). While defaulting on federal and private student loans is no picnic, defaulting on a mortgage means the mortgage lender can foreclose on the home – meaning force a sale. Is the interest rate reduction worth that risk?

There’s no right or wrong answer here, but I expect these types of refinancing programs to grow in popularity as long as the housing market remains strong. Borrowers who may be in a position to refinance their student loans through these programs should fully understand the potential risks and rewards before entering into any contract.