Consolidation vs refinancingConsolidationWith a Direct Consolidation Loan, you can consolidate multiple federal student loans into one loan with a fixed interest rate that’s a weighted average of your loans’ various interest rates rounded up to the nearest one-eighth of one percent.1 You won’t necessarily get a lower interest rate with consolidation, but you’ll have the convenience of making just one payment. Show
You can consolidate most federal education loans through StudentLoans.gov, and private student loans through some private lenders. However, you can’t consolidate both federal and private loans through the federal program.1 RefinancingRefinancing occurs when a company buys all your current student loans and issues you a new loan to pay them all off. You’ll get a new rate but you may lose payment flexibility and special benefits that were available through the individual lenders or the government. We don’t offer consolidation or refinancing at this time. We recommend that you consider the impact that these actions may have on your student loan benefits and Total Loan Cost. Questions to answer before consolidating or refinancing student loansYou may want to make a single, lower monthly payment; however, before you decide to consolidate or refinance, you should consider the pros and cons of each option. Answer these questions before you act:
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. By refinancing your mortgage, total finance charges may be higher over the life of the loan. You could leave college with multiple student
loans for many reasons. You might have had to take out a loan each year, or you might have needed multiple loans to cover a year’s costs. Consolidating those loans into a new loan with one payment is a simple way to lower your monthly costs and streamline the repayment process. If you have federal student loans and private student loans, you can refinance both into a new private loan. But you should consider your options first before making a decision, as you’ll lose certain benefits
that come with federal loans, including income-driven repayment plans and eligibility for loan forgiveness. Here are your options for consolidating federal and private loans together: No. If you have private and federal student loans, you can’t consolidate
both into a new federal loan. For student loans, the term consolidation typically refers to federal student loans, whereas private student loans are refinanced. Keep in mind: One primary difference is that federal student loans have fixed interest rates determined by Congress each year. A student could, in theory, have four different federal student loans with four different interest rates when they graduate. When you consolidate your federal loans, you
combine all the student loan balances from each year of school into one Direct Consolidation Loan with a single monthly payment. Your credit score isn’t a factor when determining your new interest rate. Instead, it will be a weighted average of the rate you were paying on the loans you consolidated. If you have private student loans, or a combination of federal and private loans, you can
combine them into a new private loan by refinancing. Your interest rate on the new loan will be based on your credit score and income. Learn More: How to Find Your Student Loan Balance The U.S. Department of Education offers this option at no cost to you, which can make your loan repayment more manageable. When you consolidate your federal student loans, the government determines the median interest rate for all included loans and rounds up by one-eighth of a percentage point, so most borrowers won’t get an overall lower interest rate. The new interest rate is the rate for the loan’s entire life. Consolidating your federal student loans has several benefits, including simplifying your monthly budget. You’ll
still have access to federal benefits, like income-driven repayment plans and loan forgiveness programs. But you can also expect some drawbacks. When you consolidate your federal student loans, you’ll lose any rate discounts and credit toward any payments you were making toward loan forgiveness under an income-driven payment plan. You can choose to consolidate some of or all your loans. The table below shows how a Direct Consolidation Loan can affect your monthly payment, depending
on the repayment term you choose. For each loan, we assumed balances of $23,000 (the maximum Direct Subsidized Loan amount allowed per year for undergraduate students) and the standard 10-year repayment plan that’s the default for all student loans. We used the federal student loan rates applicable to each academic year the loans were for. If you have multiple private student loans and you want to consolidate them into one monthly payment, you’ll need to refinance your loans. This allows you to combine the separate balances into a new loan with one monthly payment. Refinancing private loans potentially allows you to lower your interest rate too. One potential drawback is that when you refinance your private student loans, you could end up with
longer repayment terms. If you choose a longer repayment term, your monthly payment will be lower, but you could pay more interest over time. When you’re ready to refinance your student loans, compare rates from multiple private lenders using Credible’s online marketplace to ensure you can find the best fit for your financial needs. The student loan consolidation companies in the table below are Credible’s approved partner lenders. Because they compete for your business through
Credible, you can request rates from all them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like.
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees,
discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms,
eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78
data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the
help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility
requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more.
Read our full methodology.
View details
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment
options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan
operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
View details Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team.
The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts,
customer service, cosigner options, and more. Read our full methodology.
View details Trustpilot All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures To refinance your loans, you’ll need to provide all the lender information for each loan, including the total balance, payment amount, and contact information. You may also need to have your account numbers available. Once your loan is processed, your new lender will pay off your previous loan balances. Important: Keep making payments on all your existing loans until you get confirmation that your new lender has paid off the loans.
Loading widget - loan-score-tool Check Out: When to Refinance Student Loans If you’re consolidating your federal student loans or private loans, you’ll likely find the benefits outweigh any potential drawbacks. Streamlining your payments can make the monthly budgeting process much more manageable. But if you
want to consolidate your federal and private student loans, you’ll need to decide if the benefits outweigh some potentially more significant drawbacks. Consolidating your student loans could get you a lower interest rate, especially if you have a healthy credit history. A lower interest rate means lower monthly payments and a lower loan cost overall. Keep in mind: If you
refinance your federal student loans into a private loan, you’ll lose access to federal benefits and protections, which could be very helpful if you run into financial problems in the future. Federal student loan borrowers have access to income-driven repayment plans, student loan forgiveness, and forbearance options. If you want to maintain your federal
student loan benefits but also want one monthly payment, consolidating your federal student loans into a federal Direct Consolidation Loan could be helpful. Federal student loan payments are currently paused and interest rates are set at 0% as part of the CARES Act, a response by the federal government to help citizens during the COVID-19 pandemic. The repayment pause is set to expire on Dec. 31, 2022, though it could be extended again. If you currently have federal
student loans on pause, you might want to wait until payments resume to consider a refinance since it’s hard to beat a 0% interest rate. If you have private student loans, refinancing could be beneficial if you can secure a lower interest rate on your refinance loan. Whether you have federal student loans or private student loans, you should use an online loan calculator to estimate what your new payments
could look like so you can decide if refinancing or consolidating are good options for you. Step 1. Enter your loan balance Loan balance ? Enter the remaining amount of the loans you’d like to refinance $ Step 2. Enter current loan information Interest
rate ? Enter the average annual interest rate of the loans you’d like to refinance % Monthly payment ? Enter the monthly amount you currently pay on your loans (or enter remaining term) $ Remaining term ? Enter the amount of time left to repay your loan (or enter monthly payment) years Step 3. Enter your new loan information to start calculating your savings Interest rate ? Enter an estimated new interest rate. % Monthly payment ? Enter the monthly amount to pay on your new loan (or enter new loan term) $ New loan term ? Enter the amount of time you have to repay your loan (or enter monthly payment) years Lifetime Savings Increased Lifetime Cost $Monthly Savings Increased Monthly Cost $If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $. Does refinancing make
sense for you? Check Personalized Rates How to get relief for student loansIf refinancing or consolidating your student loan debt isn’t the right solution, you may have other options. Most loan servicers have deferment and forbearance options that can offer you a temporary reprieve from your monthly payments. Your loan servicer may require a balloon payment at the end of the deferment or allow you to add your missed payments to the end of your loan. Federal student loan borrowers have many options, including income-driven repayment plans, Graduated Repayment Plans, forbearance, Extended Repayment Plans, and the Revised Pay as You Earn Repayment Plan. If you can’t make your monthly student loan payments, you should contact your loan servicer to learn about your available options. About the author Angela Brown Angela Brown is a student loan, personal finance, and real estate authority and a contributor to Credible. Her work has appeared in Fox Business, LendingTree, FinanceBuzz, and Yahoo Finance. Read More Can you convert a private loan to a federal loan?Since private student loans come from private financial institutions, it's not possible to transfer private student loans into federal ones. However, it may be possible to get some federal-like benefits on your private loan, such as forbearance if you run into financial hardship.
Can I consolidate my student loans with a personal loan?Most personal loan lenders have strict policies that prohibit paying for school with a personal loan or refinancing existing student loans with a personal loan. Personal loans have shorter repayment terms: Personal loans tend to have short repayment terms — often seven years or less.
Will Biden forgive private student loans?Private student loan forgiveness isn't impossible but it's unlikely. After all, Mr. Biden's action is tied to the federal government. Loans owed to private lenders are different.
Should you consolidate your private student loans?Consolidation is a step required to be eligible for income-driven repayment plans. Ideally you'll refinance your private student loans at a lower interest rate, which can lower your monthly payment and save money on interest overall.
|