Refinancing Consolidated Federal Student Loans: Can You and Should You?

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If you’d like to combine your student loans, change your monthly payment, or get a lower interest rate, you’ll need to choose between consolidation or refinancing. Although these terms are often used interchangeably, they have different meanings, so it’s important to understand the difference between consolidation vs. refinancing.

Consolidating your student loans:

• Combines existing federal loans into a Direct Consolidation Loan
• Applies only to federal student loans
• Retains federal benefits and protections

Refinancing your student loans:

• Combines existing federal and private loans into a new private loan
• May or may not lower your interest rate
• Removes your access to federal benefits and protections

Here’s what you need to know about loan consolidation vs. refinancing:

• What is the difference between consolidation and refinance?
• When should I consolidate or refinance?
• How to consolidate federal student loans into a Direct Consolidation Loan
• How to refinance student loans into a private loan
• Consider refinancing only some of your loans
• FAQ

What is the difference between consolidation and refinance?

Choosing between consolidation and refinancing for your student loan is an important decision. If you refinance your federal student loans with a private company, you risk losing out on certain federal benefits, such as income-driven repayment plans and forgiveness options.

Consolidating your federal loans preserves or even gains federal benefits, but this option isn’t available for private student loans.

When should I consolidate or refinance?

You might choose to consolidate if you:

• Have multiple federal loans
• Want to keep your federal benefits
• Have a FFEL or Perkins loan and want the option for an income-driven repayment plan
• Are looking to simplify and streamline your student loans

On the other hand, refinancing might be the right choice for you if you:

• Have private loans or a blend of federal and private loans
• Aren’t concerned with retaining federal benefits
• Want to retain control over which lender you use

Keep in mind you’ll lose federal protections if you refinance federal loans to a private loan. Make sure it’s the right decision for you before you move forward with this option.

Read More: Student Loan Forgiveness Blocked: What’s Next?

Pros and cons of consolidation

A Direct Consolidation Loan has several advantages, including:

• Keeps access to income-driven repayment plans and forgiveness options
• Can lower your monthly payment
• Streamlines multiple federal loans into one

However, there are drawbacks to this type of loan, namely:

• It’s only available for federal loans
• You can’t consolidate a parent PLUS loan together with a loan (or loans) in the student’s name
• You’ll extend your repayment period, adding to your interest costs

Pros and cons of refinancing

If you go the refinancing route, there are several benefits:

• You can get a lower interest rate (if your credit qualifies)
• You’ll have just one loan to keep track of
• You choose the lender
• You may be able to shorten the repayment period and pay less interest

But refinancing comes with a couple of drawbacks:

• You’ll lose federal benefits if you refinance federal loans
• You might not save money if you don’t qualify for the best interest rates

How to consolidate federal student loans into a Direct Consolidation Loan

Here’s how to consolidate your federal student loans:

• Choose your loans. Decide which of your loans you’d like to consolidate into a Direct Consolidation Loan. Only federal education loans are eligible for direct consolidation — private student loans are not.
• Complete an application and apply. Next, fill out the application, available at studentaid.gov . You can apply for the loan online in as little as 30 minutes, or you can send your application in by mail.
• Keep making payments. Once you’ve applied and been approved, the loan consolidation process usually takes about four to six weeks. Keep making payments to your existing servicer until your new loan is ready.

Requirements to consolidate

The following loans are eligible for a Direct Consolidation loan:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Federal Stafford Loans from the Federal Family Education Loan (FFEL) Program (both subsidized and unsubsidized)
• FFEL PLUS Loans
• FFEL Consolidation Loans and Direct Consolidation Loans (some conditions apply)
• Perkins Loans
• Nursing Student and Nursing Faculty loans
• Health Education Assistance loans
• Health Professions Student Loans
• Loans for Disadvantaged Students

In addition, you must have graduated from school, dropped out, or be attending less than half-time to consolidate. Your loans must also be in repayment (or in a grace period).

Learn More: Student Loan Rehabilitation vs. Consolidation: Getting Out of Default

How to refinance student loans into a private loan

You can refinance private or federal loans (or both). If you’re planning to refinance, here’s what you need to do:

• Research and compare lenders. Be sure to compare as many student loan refinance companies as possible to find the right loan for your needs. Consider not only interest rates but also repayment terms, any fees charged by the lender, and eligibility requirements.

• Pick a loan option. After you’ve compared lenders, choose the loan that works best for you. For example, if you want a shorter repayment term, you can pick a lender that offers five- or 10-year terms.

• Complete the application. Once you’ve picked a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs. Also be prepared to provide information about the student loans you want to refinance.

• Manage your payments. If you’re approved, continue making payments on your current loans while the refinance is processed. Afterward, you could consider signing up for autopay so you won’t miss any future payments — many lenders offer rate discounts to borrowers who opt for automatic payments.

Compare Rates Now

Requirements to refinance

To qualify for a new loan with a private lender, you’ll typically need the following:

• Good credit (typically a MyFICO score of 670 or above)
• Stable income
• Low debt-to-income ratio

If you need a boost, applying with a cosigner might help.

Check Out: Refinance Student Loans With a Cosigner in 3 Steps

Consider refinancing only some of your loans

If you have multiple student loans, keep in mind that you don’t have to refinance all of them. For example, if you have a mix of federal and private student loans, you might want to refinance only the private loans so you can maintain your federal benefits and protections.

FAQ

How often can I refinance student loans?

You can refinance student loans as many times as you want — there’s no limit. For example, you might decide to refinance again if you can get a lower interest rate in the future.

However, this doesn’t mean that you should refinance every chance you get. Be sure to weigh the decision carefully, especially if you’re thinking about extending your repayment term. Adding time to your repayment period means paying more in interest and staying in debt for longer.

How much could I save by refinancing or consolidating?

How much you can save will depend on a few variables, including the interest rate, repayment terms, and overall loan amount.

For instance, suppose you’d like to refinance two existing loans totalling $45,000 with an interest rate of 6.5%. Your monthly payment is $880, and you have five years left. If you refinance to a new 10-year loan, with a rate of 4.5%, you could lower your monthly payment to $466, saving $414 per month.

However, by adding another 10 years of repayment, you’ll actually increase your overall interest paid by $3,136.

Use our student loan refinance calculator to input your existing loan details and see whether a new loan makes sense for you.

Should I refinance or consolidate?

You’ll probably want to go with consolidation if you have eligible federal loans and aren’t looking to change your interest rate. If you have private loans and want to combine them, refinancing is the logical choice.

Before you refinance your student loans, consider as many lenders as possible to find the right loan for your needs. Credible makes this easy — you can compare your prequalified rates from multiple refinancing lenders in two minutes.

The student loan refinancing 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 of 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.

Lender	Variable rates from (APR)	Fixed rates from (APR)
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	5.33%+	4.9%+
Fixed APR: 4.9%+ Variable APR: 5.33%+ Min. credit score: 720 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: 720 Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 - $149,000 Max. Graduate Loan Balance: $200,000 - $400,000 Offers Parent PLUS Refinancing: Does not disclose
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	7.29%+1	7.0%+1
Fixed APR: 7.0%+1 Variable APR: 7.29%+1 Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
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	6.99%+2	6.99%+2
Fixed APR: 6.99%+2 Variable APR: 6.99%+2 Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
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	8.05%+5	6.0%+5
Fixed APR: 6.0%+5 Variable APR: 8.05%+5 Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 24 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
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	5.28%+3	5.48%+3
Fixed APR: 5.48%+3 Variable APR: 5.28%+3 Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
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	8.4%+4	5.9%+4
Fixed APR: 5.9%+4 Variable APR: 8.4%+4 Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee, returned payment fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
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	5.54%+	5.24%+
Fixed APR: 5.24%+ Variable APR: 5.54%+ Min. credit score: 700 Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 15 Max. undergraduate Loan Balance: $125,000 Time to Fund: 10 to 30 days Repayment options: Immediate repayment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from an eligible institution Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: LendKey Technologies Inc. Max. graduate Loan Balance: $175,000 Credible Review: LendKey Student Loans review Offers Parent PLUS Refinancing: No
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	N/A	6.2%+
Fixed APR: 6.2%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
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	7.12%+ - 11.19%+8	7.610%+ - 14.510%+8
Fixed APR: 7.12%+ - 11.19%+8 Variable APR: 7.610%+ - 14.510%+8 Min. credit score: Mid-to-high 600's FICO8 Loan amount: $5,000 to $500,000 (depending on degree) Loan terms (years): 5, 7, 10, 15, 20, 25 years8 Time to fund: 3 business days Repayment options: Immediate Fees: Late fee, NSF fee Discounts: Autopay8 Eligibility: Must be a U.S. citizen or have permanent residency status with a valid U.S. Social Security number Customer service: Email, phone Soft credit check: Yes8 Cosigner release: After 24 months8 Loan servicer: Firstmark Services Max. undergraduate loan balance: $125,000 Max. graduate loan balance: $500,000 Offers Parent PLUS loans: Yes Min. income: You or your cosigner must meet Nelnet Bank's income criteria
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	N/A	5.79%+
Fixed APR: 5.79%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 - $249,000 Max. Graduate Loan Balance: $200,000 - $249,000 Offers Parent PLUS Refinancing: Yes
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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  | 8Nelnet Bank Disclosures

Dori Zinn and Taylor Medine have contributed to the reporting of this article.

About the author

Mary Beth Eastman

Mary Beth Eastman is a Credible authority on personal finance. Her work has been featured by The Balance, Money Under 30, and more.

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