Student loan refinancing allows you to modify either one or multiple student loans with new terms, including a lower interest rate.You can combine both federal and private student loans, should you choose to do so. In contrast, student loan consolidation typically refers to the federal program known as the Direct Consolidation Loan; although sometimes people use the term ‘consolidation’ to simply describe the merging of many loans into one.If you have older, variable rate loans, you can also lock in a fixed rate which can make it easier to plan for your financial future.
Note: The federal government does not have a student loan refinancing program.
Consolidating or refinancing student loans are two popular options that could help you manage your payments, save money and open up additional options for loan forgiveness and repayment.
This guide provides an in-depth explanation of the differences between federal loan consolidation and private loan refinancing, the pros and cons of each and insight into which options are best for different situations. News compared private lenders to come up with recommendations for different kinds of borrowers.
You may want to consolidate your federal student loans through the Direct Consolidation Loan program, and refinance some or all of your private student loans.
Or you may decide that the benefits of a private loan refinance outweigh the protections offered by the federal student loan program, and choose to refinance some or all of your federal student loans as well.