Is it legal to form a lending company to refinance my own student loans?

UPDATED: Oct 1, 2022

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Is it legal to form a lending company to refinance my own student loans?

I want to become a lender and then refinance my student loans at 0 interest or
as close to zero as possible through my own lending company. Is this legal to
do? If so, what would be required and what is that process like?

Asked on July 9, 2019 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can, but it is not clear what advantage or purpose doing so serves. When you refinance a loan, you are paying it off to replace it with another loan--even though you may repay the new loan over time, the old loan must be paid off in full; if this would be your own company, that means you'd have to have the money to pay it off; if you could do that, why not simpy pay it off instead of loaning yourself money? Lending yourself money does not let you refinance the existing loan unless you have the money available to do so.
If determined to do this for some reason, just form an LLC and loan yourself the money from the company; an LLC may make a private loan to a person.

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