You can still consolidate private student loans, but you can’t do it through any government program. Similar to consolidation, student loan refinancing is taking out a new loan to pay off the existing loans and combining them into one.
Unlike consolidation, though, student loan refinancing allows the borrower to seek better interest rates and repayment terms, reducing both monthly payments and the total repayment amount of student debt.
A borrower can refinance both federal and private loans.
When Refinancing Makes Sense Even though many people don’t think twice about refinancing their mortgage or auto loan, student loan holders often don’t look into refinancing solutions.
With an average balance of ,400, student debt is a big part of the average college graduate's life.
At Lend EDU, we help borrowers compare the top student loan companies in one place.
Yet those who end up refinancing their student loans can walk away with thousands of dollars saved over the life of their loan.
Student loan refinancing is also not one size fits all.Consolidated student loans through the federal government are calculated by taking the weighted average of the interest rates of all the separate loans being packaged together.The repayment term and the lender can be changed during the consolidation process. Most federal student loans are eligible for government-backed consolidation, but private education loans are not.However, it’s worth spending the time getting familiar with your loans before making the switch as there are certain benefits associated with federal student loans that you might lose if you consolidate or refinance. Keep in mind that these definitions hold true whether your loans are private or federal.We strongly believe that student loan refinancing is a great opportunity to save money for many people.
Additionally, loan consolidation might lead to the loss of some borrower benefits, such as interest rate discounts, principalrebates, or loan cancellation benefits as a result of switching lenders.