Can I Consolidate Student Loans?

Joe Schwartz

Joe Schwartz

Debt Consolidation Editor |

Thinking about consolidating your student loans? Learn more before getting started.

If you are dealing with multiple student loans, or have other loans in addition to your student loans, you may want to consider debt consolidation. Instead of having to pay and keep track of numerous monthly payments, you can switch to one monthly payment, and in many cases renegotiate the loan terms and lower your interest rates.

Types of Student Loan Consolidation

You can take two different approaches to consolidate student loans. The first, known as federal loan consolidation, involves taking out a Direct Consolidation Loan from the Department of Education. The second is student loan refinancing and can include both federal or private student loans.

Option 1: Federal Loan Consolidation

- Combines federal students loans into one federal loan

- Raises interest rates slightly

- May reduce monthly payments by extending repayment terms

- One monthly payment

- No credit requirement

Through federal student loan consolidation, you can secure a loan with new, often more comfortable repayment terms. For example, if you find that you can’t afford your current monthly payments, you can extend repayment terms up to 30 years to reduce payments owed each month.

With federal student loan consolidation, the interest rate on your new loan will go up slightly. The new rate will be the weighted average of your old interest rate rounded up to the nearest one-eighth of one percent.

How To Apply

If you have federal student loans, you can consolidate debt by applying for federal loan consolidation. You will be asked to enter which federal student loans you would like to consolidate. Next, choose a repayment plan based on your budget and financial needs. Make sure to review the terms and rates before accepting the loan online.

Option 2: Student Loan Refinancing

- Combines multiple federal and/or private student loans into one private loan

- May reduce interest rate

- One monthly payment

- Could lose consumer protections of federal loans

- Credit and income requirements

If you have federal and private student loans, or a combination of both, you could potentially save money through student loan refinancing. Those who qualify could reduce their interest and save money.

Private lenders have some requirements in order for applicants to qualify for student loan refinancing. Typically, you will need a credit score in the high 600s to qualify, and rates range between 2%-9%. When applying, lenders will look at financial information such as your credit score, income, employment history, and education. You may also need access to a co-signer who meets these qualifications. Based on this information, lenders will determine your interest rate and repayment options.

If you are looking to refinance federal loans into a private loan, keep in mind that this will mean losing consumer protections specific to federal loans. This could include the option of tying payments to income and getting loans forgiven by working for the government or a nonprofit organization.

How To Apply

To apply for debt consolidation, simply find a brand you trust and get in touch for a free consultation. It may take a few days for them to be in touch and put together an offer, but in many cases, it’s worth looking into.

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