Simplify Your Student Loan Payments Through Refinancing or Consolidation

If you're trying to simplify your repayments or reduce your student loan interest rate, it’s essential to understand the difference between federal consolidation and private refinancing. While these two options may sound similar, they work in very different ways.

Federal student loan consolidation is a government program that allows you to combine multiple federal loans into a single loan issued by the government. While it can help streamline payments, federal consolidation won’t reduce your interest rate. The new rate is a weighted average of your existing federal loan rates. There’s no credit check required, and you’ll keep access to federal benefits like income-driven repayment. However, it only applies to federal loans. You can’t include private student loans.

Private student loan refinancing replaces one or more existing loans (federal, private, or both) with a new loan from a private lender. If you have strong credit or a qualified cosigner, you may be eligible for a lower interest rate, which can reduce your monthly payments or help you repay your student loan debt more quickly. However, refinancing does require a credit check. And if you refinance federal loans, you’ll lose federal protections like deferment, forbearance, and income-driven repayment plans.

In summary, federal consolidation simplifies federal student loans without lowering your rate, while refinancing offers the potential to save money. But if you refinance federal student loans, you’ll forfeit federal benefits.

You might be a good candidate for refinancing if you're looking for more control over your repayment strategy and, if considering refinancing federal loans, are comfortable moving away from federal loan protections. Refinancing can be a very beneficial financial move if your credit has improved since you first took out your loans or you’ve increased your income.

Refinancing is often a good fit if:

• You want to reduce your interest rate
• You have both private and federal loans and want one monthly payment
• You’re not relying on federal loan benefits like income-driven repayment or forgiveness
• You’re in a strong financial position and want to pay off debt faster

With Credible, you can compare real prequalified student loan refinancing offers from multiple trusted lenders, with no impact on your credit score.

The terms consolidation and refinancing are often used interchangeably in other types of lending, like credit cards and personal loans. Consolidation usually refers to combining multiple debts into a single loan, often with the goal of securing a lower interest rate. So when student loan borrowers search for "consolidation," they may actually be looking for the benefits that refinancing can offer, such as:

• A lower monthly payment
• A simplified repayment plan
• A way to combine all their loans into one

While federal consolidation can help streamline multiple federal loans, it won’t lower your rate or reduce your interest charges. That’s only possible through student loan refinancing.

Refinancing student loans through Credible is fast and easy:

1. Find your student loan refinancing rates

Get prequalified in minutes with a soft credit check that has no impact on your credit score. You’ll get real, personalized rates from top lenders with fixed APRs from 3.99% to 10.49%, and variable APRs from 4.35% to 11.4%.

2. Compare your refinancing options

Evaluate student loan refinancing options side by side, considering not just the interest rates, but also repayment terms and monthly payments. None of Credible’s partner lenders charge origination fees or prepayment penalties.

3. Choose a loan

Select the best student loan refinancing option for your financial goals. You may choose to apply with a cosigner to increase your chances of approval or secure more favorable terms.

4. Submit your student loan refinancing application

Complete the lender’s full student loan refinancing application and upload supporting documents such as pay stubs and tax returns.

To determine the best student loan refinance lenders, Credible collected more than 1,000 data points on a dozen companies and evaluated them on eligibility, repayment options, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan refinance lenders, which comprise individual criteria that are also weighted.

• Eligibility: 25%
• Repayment options: 25%
• Interest rates: 20%
• Loan terms: 20%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for student loan refinancing.

Learn more about our methodology.