This is a horrible trap — and situations like this with interest piling up far beyond the original debt — are what’s behind the call in Congress for some sort of relief. that might happen in the next six months, so don’t make any moves yet. Some of the balance might be forgiven. But yes, she can refinance her house at a fixed low rate that is far lower than her PLUS loans. She can use the money to pay done some or all of the balance, but the interest won’t be deductible since it wasn’t used to purchase or improve her home. She might want to start the process now and lock in today’s low mortgage rates (which are starting to rise), because it is doubtful that huge amounts of student loans will be forgiven.