STUDENT LOAN CONSOLIDATION

This mainly depends on what type of student loans you have.

• If you have private student loans, refinancing might get you a lower interest rate or reduced monthly payment (or both), which could help you more easily manage your loans during the COVID-19 pandemic. You can check rates and potentially prequalify for a much lower rate than what you have right now.

• If you have federal student loans, it’s likely better to wait for updates on the CARES Act and forgiveness plans before consolidating with a private lender. Due to the pandemic, federals student loan payments and interest accrual have been suspended during the pandemic into 2023. If you refinance your federal student loans, you’ll lose access to this suspension as well as other federal benefits and protections, such as income-driven repayment plans and student loan forgiveness programs.

Another option is to consolidate your federal student loans through a federal Direct Consolidation Loan. While your interest rate won’t change, you could opt to extend your repayment term up to 30 years, likely getting you a lower monthly payment. Just remember that a longer term means paying more in interest over time.

There are two types of student loan consolidation: private and federal. Both private and federal consolidation let you combine all your loans into one. But federal consolidation is only for federal loans and a private consolidation loan can combine both federal and private loans.

• Federal: Federal consolidation is offered through the federal government in the form of the Federal Direct Consolidation Loan Program. It will combine all your federal loans into one so you don’t have to worry about multiple loans or servicers. You can also get a lower monthly payment if you want to lengthen your repayment period. The interest rate on a Direct Consolidation Loan is the weighted average of the rates on your existing loans, so you generally won’t save any money with federal consolidation, but it does help you simplify your payments.

• Private: Unlike federal consolidation, private student loan consolidation allows you to combine both private and federal loans into one. It also gives you the option to lower your monthly payment by extending your loan term (which means you might pay more in interest over the life of your loan). Or you could shorten your loan term or potentially lower your interest rate — which could save you money over the life of your loan.

Read More: Student Loan Consolidation vs. Student Loan Refinancing

If you’re wondering if it’s smart to consolidate your student loans, the answer depends on your situation.

Typically it’s a good idea to consolidate your student loans if:

• Your monthly payments are too high

• Your interest rates are too high

• You can afford higher monthly payments

• You have too many loans to keep track of

The best student loan consolidation companies offer generous student loan repayment options, competitive rates, low or no fees, and good customer service. To choose the best consolidation company, it’s a good idea to start by comparing your options.

If you just have federal loans and don’t want a lower interest rate, you should consider federal consolidation; but if you want to try to get a lower interest and/or have private loans to consolidate, as well, you should consider private consolidation.

Remember, if you consolidate your federal loans into a private student loans, you will lose the federal benefits such as certain income based repayment options, loan forgiveness, deferment and forbearance. You need to weigh these factors before deciding whether refinancing into a private student loan is right for you.

If you decide on private consolidation, Credible makes it quick and easy to compare multiple private lenders so you can find the right fit for you.