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How to Consolidate and Refinance Your Student Loans

There are two types of student loan consolidation: federal and private. Federal consolidation is only for federal student loans.
Oct. 8, 2019
Loans, Student Loans
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There are two types of student loan consolidation: federal and private. Private consolidation is often referred to as refinancing. These processes are often confused, but they’re very different. Here’s how:

  • Federal student loan consolidation combines multiple federal loans into a single federal loan through the Department of Education. You may need to consolidate to be eligible for some federal loan repayment programs, but federal consolidation won’t lower your interest rate. It may lower your payments by extending them.
  • Student loan refinancing, which is also called private student loan consolidation, is a financial move you do through a private lender. If you qualify, you can save money by getting a lower interest rate.

» MORE: Pros and cons of consolidating student loans 

Compare consolidation and refinancing

 Student loan consolidationStudent loan refinancing
What does it do?Combines multiple federal loans into one federal loan.Combines private and/or federal loans into one private loan.
Which loans can I combine?Federal loans only.Private and/or federal loans.
Can I lower my rates?No.Yes.
Can I save money?No. Consolidation may lower your payments by extending the loan term, but your interest amount will increase.Yes.
Can I access federal loan protections, repayment options and forgiveness programs?Yes.No.
Will I pay just one monthly bill?Yes.Yes.

» MORE: Student loan consolidation vs. refinancing

How to consolidate private student loans

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.

» MORE: Best student loan refinance companies

Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance. You typically need a credit score at least in the high 600s to qualify, and rates range from around 2% to more than 9%.

Consider refinancing if you have:

  • Made at least a few on-time student loan payments after leaving school.
  • Good or excellent credit, generally defined as credit scores of 690 or higher.
  • A stable job.
  • Access to a co-signer with those characteristics, if that doesn’t sound like you.

Refinancing federal student loans into a private loan means losing consumer protections specific to federal loans. Those include the option to tie payments to income and opportunities for loan forgiveness.

» MORE: Should you refinance federal student loans?

Like the federal government, private companies offer the option to consolidate multiple student loans into one. But while you can’t transfer private loans to the federal government, you can consolidate both federal and private loans with a private lender.

The goal with this process is not only to get the ease of a single payment, but to receive a lower interest rate based on your financial history.

Use a consolidation calculator to compare monthly payments under three different scenarios: federal student loan consolidation, private student loan refinancing and income-driven repayment plans.

Current rates from private refinancing lenders

LenderAPRGet started

Fixed: 3.45% - 6.99%
Variable: 2.05% - 6.49%

Fixed: 3.46% - 7.94%
Variable: 2.14% - 7.94%

Fixed: 3.21% - 7.24%
Variable: 2.14% - 7.21%

Fixed: 3.14% - 6.69%
Variable: 2.39% - 6.01%
Fixed: 3.49% - 8.36%
Variable: 2.01% - 8.88%

Fixed: 3.5% - 7.02%
Variable: 2.43% - 6.65%

Fixed: 3.48% - 6.03%
Variable: 2.67% - 7.41%

Fixed: 3.45% - 9.49%
Variable: 2.25% - 9.24%
Ready to compare all your student loan refinancing options?

Rates updated monthly.

What is federal student loan consolidation?

Federal loan consolidation doesn’t have a credit requirement, and it offers the benefit of a single loan bill and potentially lower payments. But it’s only for federal loans, and it won’t cut your interest rate. Consider federal consolidation if you:

  • Need to consolidate to be eligible for income-driven repayment or public service loan forgiveness. This is the case if you have Federal Family Education, Perkins or parent PLUS loans.
  • Want a single federal loan payment, but don’t need it to be drastically lower
  • Are in student loan default and want to get back on track

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. Consolidating your federal loans through the Department of Education is free; steer clear of companies that charge fees to consolidate them for you.

When you consolidate federal loans, your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next ⅛ of 1%. So, for instance: If the average comes to 6.15%, your new interest rate will be 6.25%.

» MORE: Find Your Federal Student Loan Consolidation Interest Rate

Additionally, you’ll get a new loan term ranging from 10 to 30 years. Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.

How to consolidate federal student loans

Log in to and click on “Complete Consolidation Loan Application and Promissory Note.” You’ll need to finish the application in one session, so gather the documents listed in the “What do I need?” section before you start and set aside about 30 minutes to fill it out.

1. Enter which loans you do — and do not — want to consolidate.

2. Choose a repayment plan. You can either get a repayment timeline based on your loan balance or pick one that ties payments to income. If you pick an income-driven plan, you’ll fill out an Income-Driven Repayment Plan Request form next.

3. Read the terms before submitting the form online. Continue making student loan payments as usual until your servicer confirms consolidation is complete.

If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.

The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. You can sign up for free on

If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.

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