arXiv:2610.22659v1 Announce Type: new Abstract: Methods for training language models on sensitive data differ in how they balance capability gains against the risk of leaking private information. In this paper, we present a controlled comparison of data-level and training-level interventions for navigating the capability-privacy tradeoff on synthetic medical records with canaries to probe for leakage. Direct finetuning performs best on capability metrics but leads to the most privacy leakage, while DP-SGD reduces leakage at substantial cost to capabilities. Generating synthetic data from these records offers a more favorable balance, particularly when guided by a uniqueness-aware instruction to replace private details. Relative to naive paraphrasing, privacy-aware rewriting improves privacy protection across a variety of different rewriting models. We also find that more capable rewriting models generally reduce the risks of downstream privacy leakage, although held-out fit does not improve monotonically and increased test-time compute yields inconsistent gains. Overall, these results highlight privacy-aware rewriting as a promising direction for achieving a more favorable trade-off between capabilities and empirical privacy compared to other training-level methods, and our evaluation framework supports comparisons of future models and methods.