Student Loan Consolidation: How to Consolidate and Refinance Your Student Loans

When you have student loans, it’s almost like having a book in a language you can’t read. There are so many unfamiliar terms you need to be aware of. And not understanding those terms can lead you to make disastrous moves with your student loans.

Consolidation is one of the most common student loan terms – but it’s also an incredibly useful option for borrowers who can’t afford their monthly payments.

Read below to understand how consolidation works, when you should do it and when to avoid consolidating. 

What is student loan consolidation?

Student loan consolidation refers to taking two or more loans and combining them into one singular loan. Think of it like taking two pieces of bread and making them into one sandwich. 

Consolidation can be done for a variety of reasons including

  • To get a lower interest rate
  • To get a lower monthly payment
  • To qualify for more repayment options
  • To simplify your monthly payments

Student Loan Consolidation vs. Student Loan Refinancing

There are some basic differences between student loan consolidation and student loan refinancing. Refinancing is the general term that refers to moving a loan from one lender to another. Most people who refinance their loans do so because they can qualify for a lower interest rate, saving them money in the long run. 

Consolidation is usually done by those who are looking for a lower monthly payment, even if that means paying more in total interest in the long run. If you have trouble managing multiple loans, consolidating can simplify the process. Instead of logging onto multiple websites to make your monthly payment, you’ll only have to log onto one site.

Federal student loan consolidation 

The federal government offers an official consolidation program for federal student loans. When you consolidate, you may become eligible for more income-driven repayment plans and forgiveness options. 

For example, the Public Service Loan Forgiveness (PSLF) program is only available to students with Direct Loans or Direct Consolidation Loans. If you have FFEL or a Parent PLUS loan, you can consolidate those into a Direct Consolidation Loan to become eligible for PSLF.

Borrowers with federal loans can also opt for private student loan consolidation. However, choosing that option means foregoing all benefits related to private student loans.

Government student loan consolidation will not actually save you money the same way that private loan consolidation will. The only benefits are reducing your monthly payments and making you eligible for PSLF.

Government loan consolidation has fewer requirements than private loans. For example, there are no credit score or income requirements. 

Private student loan consolidation

If you have private student loans, you can consolidate with a new lender. You can choose from multiple different lenders and should shop around to find the best interest rate, lowest fees, and best repayment term.

The best way to consolidate private student loans is to get pre-approved with several lenders so you can confirm that you have the best deal. Preapproval should not hurt your credit score and can let you get multiple quotes at once.  

Private lenders usually offer two types of interest rates: fixed and variable. Loans with fixed interest rates will have the monthly payments during the term, while loans with variable interest rates will have monthly payments that may change at any point.   

How to qualify for student loan consolidation

To be eligible for private student loan consolidation, you usually need to have a credit score of 650 or higher. There may also be a salary requirement and proof of employment.

If you don’t qualify for consolidation by yourself, you may be able to add a cosigner to improve your odds of approval. However, not all lenders let you add a cosigner so double check before you start the application process.

Even if you don’t need to add a cosigner to qualify, doing so can help you get a lower interest rate. A cosigner can be any adult you know, as long as they meet the lender’s credit score and income requirements. A cosigned loan will show up on their credit report and could affect their own ability to qualify for a loan, credit card or line of credit. 

How to apply for student loan consolidation

How to choose a lender for student loan consolidation

Choosing the best lender requires that you know why you’re consolidating. If you’re looking for the lowest monthly payment possible, then go with the lender with the longest repayment terms. If you want the lowest interest rate, then make sure to compare rates between lenders.

Make sure to look at other perks like cosigner release, which is when the lender will remove the cosigner after a certain number of on-time payments. 

Visualize a life where you consolidate your student loan debt to obtain lower interest rates, granting you the freedom to invest in your passions and future goals. By consolidating federal student loans, you unlock opportunities for forgiveness and flexible repayment plans, further strengthening your path to success.
At times, the journey might seem challenging, but keep your focus on the bigger picture. Each monthly payment brings you closer to liberation, reducing stress and simplifying your financial landscape.

Student Loan Consolidation FAQs

Is student loan consolidation the same as refinancing?

Consolidation is slightly different. The key difference is that you can refinance one singular loan but you have to consolidate at least two loans together.

Does student loan consolidation cost money? 

Unlike taking out other types of loans, student loan consolidation usually doesn’t come with any origination or application fees. However, if you consolidate a student loan for a longer term, you may pay more in total interest than if you had not consolidated.

Here’s how that works. Let’s say you have the following loans:

Loan A: $20,000 at 10% interest and a 10-year term
Loan B: $5,000 at 9% interest and a 10-year term
Loan C: $10,000 at 6% interest and a 10-year term

You qualify for a $35,000 loan with a 11% interest rate and a 15-year term. In this case, you will pay x.

How to consolidate student loans

First, start by deciding your reason for consolidating. Do you want a lower payment? Do you want to simplify your loan payments? Are you ok with paying more in total interest?

Once you know what you’re looking for, you can start comparing different lenders. 

When should I consolidate my student loans?

If you have private student loans and are struggling with your payments, consolidating into a longer term or lower interest rate can help you reduce your monthly payments. If consolidating will help you avoid making late payments or even defaulting on your loans, it may be the right step.

How do I know if my loans are consolidated?

You should receive confirmation from your new lender that your loans have been transferred. Your previous lender may also send a confirmation stating that your account has been closed and your loan has been paid off by the new lender.

You can also verify this by checking your credit report at, which will show your new lender. It may take a couple of weeks for them to appear.

Can you refinance student loans after consolidation?

You can refinance your consolidated loans at any point, as long as you qualify for a refinance.  Some borrowers can improve their credit score and then qualify for a lower interest rate on their consolidated loans. There is no limit to how many times you can refinance or consolidate your loans.

Just remember, if you refinance your consolidated federal student loans, they will become private loans. This means you’ll lose access to forgiveness programs, income-driven repayment plans and long deferment and forbearance periods.

Can student loan consolidation be undone?

Student loan consolidation is a legally binding process that cannot be revoked. Once the documents are signed and finalized, your loans will be officially moved to the new lender.

Before consolidating, make sure you understand how your loans will change. If you have federal loans, remember that you’ll lose all those perks and Benefits if you consolidate with a private lender.

Do I have to consolidate all of your student loans?

You don’t actually have to consolidate all of your loans at once. For example, if you have both private and federal loans, you can only consolidate the private ones and keep the federal loans as they are. 

This is a good way to take advantage of the benefits of consolidating private loans, while still keeping the benefits associated with federal loans.

Can you use a personal loan to consolidate student loans?

Not all lenders let you use money from a personal loan to pay off student loans. If your lender doesn’t allow this, you won’t be able to use the funds.

Even if your lender does let you do this, you may still want to stick with traditional student loan consolidation. Personal loans may have high interest rates and you’re not likely to find a better rate on your personal loan than with a student loan.

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