Consolidating federal and private student loans together
The terms consolidation and refinancing are sometimes used interchangeably, but student loan consolidation is a unique program that applies only to student loans.It is possible to refinance private and federal student loans together, but it’s not always advisable because federal student loans come with certain benefits that are lost if you refinance them with a private lender.Related: Learn more about student loan refinancing here.Another big difference is that federal student loan consolidation does not require a credit check, whereas refinancing private student loans requires good credit.For example, when you consolidate, you can keep most of the benefits of your federal student loans—like the ability to reduce or defer payments during periods of financial hardship or enroll in an income-based repayment plan.That said, certain federal student loans have forgiveness programs that are specific for that kind of loan.If you can refinance at a lower interest rate, you’ll save money both on your monthly payment and the total interest you pay.Beware, however, that if you extend the term of your loan (for example, from 10 to 20 years), your monthly payment will be lower but you will pay more in interest over the life of the loan.
Sometimes it makes sense to consolidate or refinance, but many times it doesn’t. Student loan consolidation is a program that repackages all of your federal student loans into a single loan with one fixed interest rate and one payment.
Before you consolidate, consider the following pros and cons: Note: Just remember, you must continue making payments after submitting your application until you receive notice from your servicer that underlying loans have been paid off.