Private student loan consolidation, or refinancing, means replacing multiple student loans — private, federal or a combination of the two — with a single, new, private loan.
You’ll save money if your new loan has a lower interest rate.
Private consolidation is often referred to as refinancing.
These processes are often confused, but they’re very different.
To find the best plan for you, check out Federal Student Aid’s repayment estimators before you begin the consolidation application.
The tool shows you how much you’d pay per month on the various plans.
The federal loan program does not offer refinancing, so when you refinance your federal loans, you convert them into private loans.
The private refinancing company pays off the federal loan program, essentially buying your debt.
Here’s how: Federal student loan consolidation basics How to consolidate federal student loans Student loan refinancing basics Compare student loan refinance lenders When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan.
You’re generally eligible once you graduate, leave school or drop below half-time enrollment.
When you’re ready, go to studentloans.gov, log in, and follow these steps to apply: You can consolidate all your federal loans or just some of them.