Student Loan Consolidation
Federal and private student debt consolidation is available. Although you may combine all of your debts into one with either private or federal consolidation, student loan consolidation only allows you to combine federal loans,
but “private consolidation,” also known as student loan refinancing, allows you to combine both federal and private loans. Here is a comparison of the advantages and disadvantages of student loan refinancing and consolidation to help you determine which is best for you.
debt consolidation for students
Your payments might be made simpler by using a student loan consolidation, sometimes referred to as a federal Direct Consolidation Loan, particularly if you have many loans or services. You typically won’t save any money with federal consolidation since the interest rate on a Direct Consolidation Loan is the weighted average of the interest rates on your current loans.
loan refinancing for students
Refinancing your student loans can let you consolidate many debts into one, just like consolidation. You may also combine federal and private student debts into one. You could even be able to reduce your interest rate, which would end up saving you money over time.
advantages of refinancing student loans
allow you to combine federal and private student loans so that you only have to make one monthly payment. might be able to reduce your interest rate, saving you money. You might be able to reduce your monthly payments by selecting a longer term (but if you choose to do so, you might end up paying more in interest over the life of your loan)
After making a certain number of on-time payments, you may be able to dismiss your cosigner from the loan if you used them to originally achieve a cheaper interest rate.
Both can be useful in streamlining your life by merging your debts into a single, manageable payment. Federal consolidation is probably your best option if your objective is to keep federal advantages such as an income-driven repayment plan. However, refinancing could be the best course of action if you’re wanting to save money on your student loans overall.