Should I Consolidate or Refinance My Student Loan Debt?

Should I Consolidate or Refinance My Student Loan Debt?

Tips to consider for refinancing or consolidating student loans.

Refinancing or consolidating your student loans could be a good idea. But the only way you’ll know is if you understand the differences and similarities between them.

The Breakdown

Refinancing a loan combines either federal or private student loans (or a combination of both) into one, new private loan. When you refinance, it’s possible to save money by getting a lower interest rate. However, remember that if you refinance a federal loan, you can lose payment provisions, like income-based payments. By refinancing, you’ll also pay just one bill per month, which makes things easier. 

Consolidation is only available with federal student loans. Therefore, you can only combine multiple federal student loans into one, new federal loan. You won’t likely save any money, as your interest rate will be the weighted average of the loans you consolidate, but it may prove to be easier to manage because again, you’ll pay just one bill per month. Learn more at

How They Work

Consolidation Loan: A Direct Consolidation Loan from the federal government allows you to consolidate multiple federal education loans into one loan.* The result is a single monthly payment for your federal student loans at one interest rate instead of multiple payments. A Direct Consolidation Loan has a fixed interest rate for the life of the loan and is only available for federal student loans.

Private Student Loan Refinance: Your credit union will pay off your existing student loans* (including federal and private) and combine them into a single new loan. You will then make a single loan payment to your credit union instead of multiple lenders. Borrowers may choose fixed or variable interest rates which are then set based on your financial and credit history.* By refinancing, you can potentially lower your interest rate or monthly payment depending on the repayment terms you select.

How to Decide

Refinancing and consolidating your student loans may be the right choice if:

You might want to consolidate if you have multiple federal loans and are not eligible for any federal debt payment program. On the other hand, you may consider refinancing if you have private student loans and are looking to save some cash.

Keep in Mind: Refinancing your student loans can be a great way to lower your interest rate, decrease your monthly payment and pay off your loan sooner. Just remember, when you refinance federal student loans into a private refi loan, you’ll lose access to any current or future federal benefits, such as potential debt cancellation or income-driven repayment options. It’s important to evaluate your options so that you can make educated decisions.

Explore these additional resources to help determine if refinancing could be right for you:

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