The arithmetic is easy and it isn't the whole decision. A private student loan at 9.5% is more expensive than a policy loan at 5%, so moving the balance saves the spread. A federal loan at 4.5% is cheaper than the policy loan, and moving it costs you money and gives up protections you can't buy back.
Federal loans come with income-driven repayment, deferment and forbearance if you lose a job, and forgiveness programs for public service work. They also die with the borrower. If your kid has federal loans and passes away, the balance is discharged. A policy loan you took to pay those off does not go away, it sits against your death benefit. That's a real trade and it doesn't show up in a rate comparison.
Private loans are the target. No forgiveness, no income-driven plans, usually a co-signer who's exposed, and rates that often run well above what a policy charges. Clearing a $40,000 private loan at 10% with a policy loan at 5% saves about $2,000 in the first year alone, and it removes a monthly payment with a due date attached to it.
The co-signer piece is often the actual reason people do this. A parent who co-signed is on the hook for the whole balance and it's sitting on their credit report affecting what else they can borrow. Paying it off with a policy loan clears the report and moves the obligation somewhere nobody reports anything.
Then set the payback yourself, because the carrier won't. The habit that makes this work is taking the payment that used to go to the student loan servicer and redirecting it to the policy, same amount, same day of the month. If the private loan payment was $480, keep sending $480. The loan clears in about the same time and the cash value rebuilds underneath.
Don't drain the policy to do it. Policy loans reduce cash value and death benefit while they're outstanding, and a loan that takes cash value down to a thin margin leaves nothing for the next thing. There's always a next thing. If clearing the whole balance would take more than about half your available cash value, clear the highest-rate portion and leave the rest where it is.
There's also a tax question on student loan interest. Federal student loan interest can be deductible up to a limit for people under the income phaseouts. Policy loan interest on a personal loan generally isn't. That's a smaller number than the rate spread in most cases, and your CPA should be the one to weigh it.
Run the private loans first, leave the federal ones where they are unless the rate is unusual, and check whether the borrower is on track for a forgiveness program before you touch anything federal.