It can be difficult to keep track of multiple student loans with different interest rates and payments. In this case, student loan consolidation could be a helpful strategy. Through consolidation, you can combine your existing loans into a new loan with just one monthly payment, which could greatly simplify your repayment.<\/p>\n
Keep in mind that there are options for both federal and private student loan consolidation, depending on your needs. If you have federal student loans and aren’t sure how you’ll afford your payments after the forbearance period granted by the CARES Act expires on May 1, 2022, then federal consolidation in particular might help you manage your loans more easily.<\/p>\n
Here’s what you should know about student loan consolidation:<\/b><\/p>\n <\/a><\/p>\n Student loan consolidation<\/a> is the process of combining your student loans into one new loan with a single payment. Here are the two main categories of consolidation available for student loans:<\/p>\n However, if you refinance federal student loans, you’ll lose access to federal benefits and protections \u2014 such as income-driven repayment (IDR) plans and student loan forgiveness programs.<\/div><\/div>\n Learn More: <\/i><\/b>The Complete List of Student Loan Forgiveness Programs<\/i><\/b><\/a><\/p>\n <\/a><\/p>\n Federal student loan consolidation can lower monthly payments by stretching out your loan term to as long as 30 years. But your interest rate does not change \u2014 it\u2019s the weighted average of your existing loans, rounded up to the nearest one-eighth of a percent.<\/p>\n Since you don\u2019t get an interest rate reduction, the tradeoff for lowering your monthly payment through federal consolidation can be thousands of dollars in additional interest charges<\/a>. But if you end up qualifying for loan forgiveness in an IDR plan, you might come out ahead.<\/p>\n You may qualify for a lower interest rate with lenders that offer private student loan consolidation. Refinancing with a private lender also allows you to adjust your repayment term, and a lower interest rate can help you pay your loans off faster. Borrowers who lower their interest rate and shorten their repayment term can save tens of thousands<\/a> in interest charges.<\/p>\n Learn More: <\/i><\/b>Student Loan Consolidation vs. Student Loan Refinancing<\/i><\/b><\/a><\/p>\n\n <\/a><\/p>\n Private student lenders will consolidate almost any federal or private student loan taken out by a creditworthy borrower to attend a qualified school. Most lenders will refinance parent PLUS loans<\/a>, and a few will also let parents transfer those loans to their children.<\/p>\n Only government student loans are eligible to be combined in a federal Direct Consolidation Loan. But almost any type of federal loan, including the following, qualifies:<\/p>\n \n
How does student loan consolidation work?<\/h2>\n
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For private student loan consolidation, you\u2019ll need:<\/h3>\n
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For a federal Direct Consolidation Loan, you\u2019ll need:<\/h3>\n
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How consolidation compares to refinancing student loans<\/h2>\n
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\n\t <\/td> Federal consolidation<\/strong><\/th> Private consolidation (refinancing)<\/strong><\/th>\n<\/tr>\n<\/thead>\n\n \n\t What is it?<\/strong><\/td> Combines most types of federal student loans into a new federal loan<\/td> Get a new interest rate and repayment term by refinancing into a private loan<\/td>\n<\/tr>\n \n\t Best if<\/strong><\/td>
\n<\/li>Your interest rates are too high<\/td>\n<\/tr>\n \n\t Which loans can be combined?<\/strong><\/td> Most federal loans<\/td> Private loans and most federal student loans<\/td>\n<\/tr>\n \n\t Will it lower my interest rate?<\/strong><\/td> No<\/td> Yes
\n(creditworthy borrowers may qualify for a lower interest rate)<\/small><\/td>\n<\/tr>\n\n\t Can it save me money?<\/strong><\/td> Maybe, if you qualify for loan forgiveness
\n(you may pay more if you don\u2019t qualify for loan forgiveness)<\/small><\/td>Yes, especially if you don\u2019t extend your repayment term<\/td>\n<\/tr>\n \n\t Will I keep federal benefits and protections?<\/strong><\/td> Yes<\/td> No<\/td>\n<\/tr>\n \n\t Credit check required?<\/strong><\/td> No<\/td> Yes<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n Loan types that can be consolidated<\/h2>\n