Student Loan Consolidation & Refinancing: The Easy Way

Posted on

In recent years, I have consolidated and refinanced my student loans. If you want to consolidate your loans or refinance them at a lower interest rate, this article will show you how to do it the easy way.

The article is written with an audience in mind that already has enough credit history to qualify for most student loan consolidation/refinancing companies. This article will be split up into two parts.

Part one of the article is dedicated to consolidating student loans by means of your Federal Direct Loans program. Part two explains how to get your Federal Family Education Loan (FFEL) consolidated or refinanced via private lenders.

As stated previously, if you are unable to find a good lender for either consolidation or refinancing, be sure to read part two and figure out how to find a reputable lender.

Differences Between Consolidating Federal Student Loans & Federal Plus Loans For Parents

There are several differences between consolidating federal student loans and consolidating federal PLUS loans for parents/grad students.

If you have PLUS loans or some other variation of a federal loan that needs to be consolidated, it would probably be best if you just go ahead with following through with this entire guide.

If you do not have any type of direct subsidized or unsubsidized federal student loan, go ahead and skip down to the consolidating PLUS loans section.

You will need a credit report as well as documentation of your social security number in order to consolidate student loans through the Federal Direct Consolidation Loan Program.

If you do not have those items, please follow part two of this article and then come back here once you have received them.

This guide will specifically discuss consolidation or refinancing with companies that offer Student Loan Consolidation Loans and/or Refinance Loans.

Please note that we are NOT affiliated with any of these companies and cannot vouch for their services.

However, we can say that if you find a reputable lender after reading our guide, it should be no problem for them to consolidate or refinance the student loans they offer.

We cannot guarantee that you will be accepted for a consolidation/refinancing loan, as this is dependent on your credit score and other factors.

Student Loan Consolidation Loans and Refinance Loans are not Federal Loans, they are private loans offered by individual lenders.

Do NOT apply for these loans unless you have good credit, otherwise, there isn’t any possible way to get approved for a loan.

What does it mean to refinance or consolidate a student loan?

When you refinance or consolidate a student loan, it means that you are using one large, new loan to pay off all your old loans. 

The amount of money that can be borrowed is usually much higher than the amounts offered on the individual loans themselves.

This is because the consolidation lender offers an interest rate that is much lower than what could be attained by taking out multiple loans at once.

The benefit of consolidating/refinancing with Student Loan Consolidation Loans and Refinance Loans companies is mainly for those who want to take advantage of the larger financial opportunities now.

For example, instead of paying $50 per month on 5 different $1,000 loans, you would only need to pay $25 per month on 1 $5,000 loan. 

Pros and Cons Consolidating Your Student Loan

The other benefit is for those who want to lower their monthly payment (even though it will be at a higher interest rate).

Lowering your monthly payments can be another good motivation for consolidating student loans, but you should try to avoid doing this if possible.

If you consolidate your federal student loans with private lenders, your rate could possibly go up by 4% or more (depending on what happens in the economy).

Some people believe that they might as well pay off their subsidized and unsubsidized direct loans because of this, even though it would be better to leave them intact.

By leaving the direct loans untouched, you will still have access to all federal repayment programs for borrowers with financial hardships.

This means that instead of consolidating and paying off your direct subsidized loans (which would be the wise thing to do), you could instead make extra payments towards your unsubsidized direct loans.

This helps you avoid wasting money on consolidation interest, by putting that money into a higher interest loan.

Another reason why it might not be beneficial to consolidate student loans is if you are not planning on keeping them long-term.

If you have federal subsidized or unsubsidized direct loans, they have extremely favorable repayment options because they are direct government loans.

These include income-based repayment plans, qualifying for public service forgiveness, deferment/forbearance, etc.

However, when these types of federal student loans are consolidated with private, all this goes away.

Your interest rate will still be lower than it would otherwise be, but you will have lost all your previous benefits associated with having federal direct loans. This may actually end up increasing the amount of money that you pay over the life of your loan.

You might also want to consolidate or refinance student loans for other reasons besides wanting a lower interest rate/payment or more financial assistance.

If you are having trouble making payments because your credit score is too low, refinancing/consolidating could help because the lender usually doesn’t look at credit when deciding whether or not to approve an application.

Unfortunately, if this is what you intend on doing (refinancing/consolidating with poor credit), please make sure to read our next section before continuing.

What lenders look for before approving a ‘student loan consolidation refinance’ application

The biggest thing that most private lenders will be looking at is your credit score. Before you even apply to consolidate or refinance, make sure your credit report is as clean as possible.

Paying bills on time and keeping balances low are the two biggest factors in determining how good your credit score is.

Getting a co-signer may also help you get approved if you have bad credit (it often depends on what type of lender it is, though).

Even after making sure your credit score is as clean as it can be if you don’t meet certain requirements, some lenders may not approve an application to consolidate student loans.

This usually applies more to when they are trying to refinance student loans ( it is possible to consolidate with bad credit, but not usually when you’re trying to refinance).

A general idea of what requirements borrowers must meet in order to qualify for refinancing include: Not having any major derogatory mark like bankruptcy or many charge-offs, having an income that can be verified, and having a low debt-to-income ratio.

If you do not meet these requirements, consolidate instead of refinancing. 

It might still cost more over time than consolidating federal student loans together, but at least you will get all the benefits associated with the direct loan program.

Also keep in mind that if your goal is to just lower your interest rate/payment, it is better to consolidate and pay extra than to refinance because it will save you money in the long run.

If you do meet all of these requirements, refinancing can still be a good idea. 

Just make sure you fully understand the consequences of losing your specialization benefits on direct loans if you are consolidating.

You might also want to consider lowering your credit score ever so slightly before applying for refinancing (by canceling some credit cards or paying down debt).

Doing this may make it easier to get approved, but keep in mind this is not always the case. The only way to know for sure whether or not your application would be declined with a lower TU FICO score is by applying.

How can you refinance or consolidate student loans?

The first thing you need to do is decide whether or not you want to consolidate/refinance federal or private student loans. If it’s federal student loans, go ahead and skip down to “How can you refinance federally held student loans?”.

 If it’s private student loans, keep reading.

There are usually two ways of refinancing or consolidating privately held student loans.

You can either call up your existing lender(s) for a new lower rate/payment offer or look into companies that specialize in this sort of thing.

There are many benefits to looking into these third-party companies (i.e., they will help walk you through the application process.

They will try to find lenders who are willing to give borrowers with sub-par credit a chance, etc.), but there are also some downsides (i.e., they often charge an application fee for this service).

There are many companies that offer refinancing/consolidation services for student loans.

You can also call up your existing lender(s) to see if they have any special offers available.

The second option is to apply online using one of the company’s websites mentioned above (or another website not mentioned here).

Many of the application forms do not require much information at all to submit, so it shouldn’t take very long before you get results (if you get results).

Before applying for refinancing or consolidation, make sure to ask about specific things they don’t want you to know when consolidating student loans.

They usually vary from company to company, but the companies themselves should tell you. I would just call them up and say something along the lines of “I am thinking about signing with your company to consolidate/refinance my private student loans. Is there anything special I need to know that is not mentioned on your website?”

How can you refinance or consolidate federally held student loans?

It is a lot harder than finding a lender who will refinance/consolidate privately held loans. In fact, it can be downright impossible, depending on how much debt you have and your credit score (which means you must be as close to perfect as possible).

There is only one way of refinancing/consolidating federally held student loans: go straight to the source. 

The main organization that handles this for all federal student loan borrowers is called the Federal Direct Consolidation Program.

You can either apply using their online application or call them up at 888-264-5578 to have an application mailed to you.

This program makes it easy for students who need consolidation help, but there are a couple of downsides.

First, it doesn’t offer any sort of interest rate reduction; you will just get a new single direct consolidation loan with slightly lower monthly payments than before.

Does consolidating student loans lower monthly payments?

It depends on a number of factors. Refinancing privately held student loans can lower monthly payments, but refinancing federally held student loans will not.

Consolidating federal and private student loans together might lower monthly payments, but this varies from person to person.

Can my student loans be forgiven if I consolidate?

No, and yes. It depends on the type of loan you have and the type of consolidation program you choose.

Federal student loans cannot be forgiven through consolidation (unless you go into public service), but it is possible to use an income-driven repayment plan after consolidating your federal loans together. Private student loans can sometimes be forgiven through refinancing/consolidation, but this varies from lender to lender.

How do I know if I should consolidate my student loans?

If you are having trouble making your payments each month, then you should definitely consider applying for a private refinancing/consolidation company and see if they can lower your interest rate and monthly payments.

If this doesn’t work out in your favor, then just complete the application forms for refinancing/consolidating federal loans and see if you can get a better interest rate that way.

If none of the options listed here help out your financial situation and you still want to consolidate your student loans, then I would recommend taking a loan from your parents (or anyone else who is willing to give it to you) and using that money instead! 

Loans from family members usually have much lower interest rates than any other type of loan, so this could save you a lot of money in the long run.

How do I find the best deals on student loans?

The best deals are often not found online or through companies. 

It is very rare for someone with good credit standing to pay nearly as much as someone with bad credit when it comes to interest rates, so I would just call around to your local banks/credit unions and ask what sort of student loan deals they have. 

Often times you will be surprised by the information that you hear!

What are the disadvantages of consolidating your student loan debt?

There are a number of disadvantages to consider before consolidating your student loans.

First, you do not get the option of changing your repayment plan to an income-driven plan after you consolidate federal student loans together.

Second, if your parents co-signed your loan then they may have to release their claim to any future amount that is paid back on your loan, and finally, it can be difficult to change your mind later down the road if you would like to switch companies.

Does it cost money to consolidate student loans?

It can cost money to consolidate your student loans. If you have a federal loan, then the only fee that might be charged is a 1% origination fee.

If you have a private student loan, then it will most likely cost several hundred dollars in fees for refinancing or consolidation.

Will consolidating my federally-owned student loans make them go away?

No, consolidating federally-owned student loans will not eliminate the original loan. Consolidating only allows you to get a new single loan with easier terms. 

This can be very beneficial if you are trying to save money on your monthly payments, but it is good to keep in mind that you are still responsible for paying off your original loans.


Before you consolidate or refinance your student loans, it is important to look over all of your options very carefully to make sure you are getting the best possible deal.

Also, consider things like how long you will be in debt when deciding whether or not refinancing/consolidating is right for you.

Do some research first, then consolidate/refinance if you have to. 

If none of the options listed here help out your financial situation, and you still want to consolidate your student loans, then I would recommend taking a loan from your parents (or anyone else who is willing to give it to you) and using that money instead!

Loans from family members usually have much lower interest rates than any other type of loan, so this could save you a lot of money in the long run.

Your IP :
Country: Singapore
City :Singapore
Long : 1.35208 | Lat : 103.82
Timezone : Asia/Singapore
ISP: Hostinger International Limited

Leave a Reply

Your email address will not be published. Required fields are marked *