How to Consolidate Multiple Student Loans

How to Consolidate Multiple Student Loans

Today 45 million Americans—virtually 1 in each 5 adults–carry a mixed student debt of $1.4-$1.6 trillion, in accordance with varied estimates from Experian and the New York and St. Louis branches of the Federal Reserve.

Throw in the truth that the common American has 4 credit playing cards, to not point out mortgages, automotive loans, and any variety of different lending merchandise, and it’s solely pure that many individuals discover it arduous to handle all their funds. 

Thankfully, there’s a simple solution to reorganize and handle a number of loans: consolidation. When it involves student debt, there are just a few consolidation choices to think about.

Consolidation vs. Refinancing

Before we go on and discover the choices, it’s necessary to set the report straight on what the phrases consolidation and refinancing really imply. These 2 phrases are inclined to get used interchangeably when the subject of student loans is being mentioned. Although there are similarities, consolidation and refinancing usually are not technically the identical factor.

Consolidation is actually the becoming a member of collectively of many issues into 1 entire. In the case of student loans (or loans typically), it refers back to the strategy of turning a number of loans into one loan. Instead of getting a number of separate student loans with separate month-to-month funds and billing statements, consolidating permits you to handle all the things below 1 month-to-month fee. Consolidation typically, however not essentially, entails a greater rate of interest or cheaper month-to-month funds than the unique loan.

Refinancing refers back to the reorganization of a loan on contemporary phrases, ideally with a decrease rate of interest and cheaper month-to-month funds. Refinancing can theoretically embrace consolidation in that you would be able to consolidate a number of loans right into a single loan and safe higher reimbursement phrases on the brand new loan.

Our Top 3 Student Loan Refinance Options

Still confused? Let’s take a look at the assorted student debt consolidation and refinancing choices.

Option #1 – Federal Government Debt Consolidation Loan



Simplifies federal student loans into 1 fee     Usually entails larger general curiosity over the lifetime of the loan
Potentially decrease month-to-month fee Loss of borrower advantages, e.g. rate of interest reductions, loan cancellation, forgiveness packages.
Option of switching variable-rate loans to fastened price loans Loss of credit for any funds made towards income-driven reimbursement
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A Direct Consolidation Loan is a sort of loan supplied by the federal authorities that permits an individual to consolidate a number of federal schooling loans into 1 loan. This choice might solely be used to consolidate federal loans and can’t be used on personal loans. A Direct Consolidation Loan gives the good thing about a single month-to-month fee as a substitute of a number of funds. It may give you entry to new loan reimbursement plans and loan forgiveness packages. However, it might contain lack of advantages connected to your authentic loans, which additionally embrace forgiveness packages and rate of interest reductions.

A Direct Consolidation Loan has a set rate of interest for the lifetime of the loan. The fastened price is the weighted common of the rates of interest on the loans being consolidated, rounded as much as the closest one-eighth of 1 %. Unlike refinancing, a Direct Consolidation Loan doesn’t provide the choice of a decrease rate of interest than the unique loan. However, as a result of a Direct Consolidation Loan entails a probably longer reimbursement time period (as much as 30 years), it might have the impact of decreasing your month-to-month fee.

Most federal student loans are eligible for consolidation, together with the next:

  • Subsidized Federal Stafford Loans
  • Unsubsidized and Nonsubsidized Federal Stafford Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students
  • Federal Perkins Loans
  • Nursing Student Loans
  • Nurse Faculty Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • FFEL Consolidation Loans and Direct Consolidation Loans (solely below sure circumstances)
  • Federal Insured Student Loans
  • Guaranteed Student Loans
  • National Direct Student Loans
  • National Defense Student Loans
  • Parent Loans for Undergraduate Students
  • Auxiliary Loans to Assist Students

Top Student Loan Refinance Options


  • Compare totally different loan choices
  • No charges

In addition to being a number one choice for private loans, Credible gives aggressive charges for student loan refinancing as effectively. It is a loan market working with a few of the most well-known and most dependable loan suppliers within the business. With a contemporary method to student loans, and excellent customer support, Credible is a perfect resolution for individuals who wish to weigh their choices.

Read the complete Credible assessment >>

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Credible Credible View Rates

Splash Financial

  • No prepayment penalties
  • No software charges

Splash Financial is a rookie participant making dwelling runs with student loan refinancing. It gives low charges, a simple to navigate web site, versatile reimbursement schedules and particular charges for medical residents.

Read the complete Splash Financial assessment >>

Splash Financial Splash Financial View Rates

For different prime lenders, go to our comparability chart.

Option #2 – Refinance with a Private Lender



Lets you consolidate federal and student loans Loss of advantages related to federal student loans, e.g. forgiveness plans
Potentially decrease rate of interest and decrease month-to-month funds Strong credit required (usually 620-680+) to qualify and get price
Option of dropping cosigner Application can influence credit rating

A student loan refinance entails changing a number of federal and/or state and/or personal student loans with a single new loan from a personal lender. A student loan refi entails contemporary loan phrases with (ideally) a decrease rate of interest and decrease month-to-month funds. For debtors with wonderful credit, personal lenders are recognized to supply student loan refis with APRs as little as 2.5%. The bigger your present student debt, the better the financial savings you’ll be able to accrue by securing a decrease price.

If you refinance 1 student loan with contemporary phrases, then it’s technically only a refinance. But in case you refinance 2 student loans, combining them into one loan with contemporary phrases, then it’s also a consolidation. The best good thing about refinancing with a personal lender is that you should utilize it to mix federal and personal loans into one new loan. Another profit is the potential for considerably decrease rates of interest—and due to this fact greater saving—than the federal authorities’s charges. For instance, Credible says its refinancing clients save $11,000 on common on complete curiosity funds.

On the flipside, it must be famous that non-public student loan refinance suppliers are recognized for having strict credit necessities. Overall, it’s been estimated that solely round 10% of Americans with student debt would qualify for a student loan refinance. Generally talking, lenders will solely approve debtors with at the least 620 or in some instances 680 credit and excessive earnings.

Option #3 – Explore Other Alternatives

Although authorities consolidation loans and personal student loan refinancing are the two most typical choices, there are just a few alternate options. One choice is to borrow the cash from one other supply, akin to an unsecured private loan or dwelling fairness loan and use the funds to repay your student debt. Of course, this is able to then require you to repay your new loan. A private loan or HEL solely actually is sensible in case you can by some means safe a deal that saves you extra money than the usual choices. It’s usually simpler to get authorized for a private loan than a student loan refinance, however the charges are normally larger and—like a refinance—it additionally entails lack of advantages connected to federal student loans.

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Another choice to learn about is utilizing a state refinancing program, supplied in 12 states: Alaska, Connecticut, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, New Hampshire, New Jersey, North Dakota, Rhode Island, and South Carolina. The guidelines for state refinancing packages differ, however usually they can be utilized to consolidate and refinance the phrases of your outdated student loans.

How to Choose the Right Consolidation Option

Before deciding consolidate, take into account your degree of student debt, kinds of student debt, and the way a lot threat you’re prepared to take. 

If you could have federal student loans, a Direct Consolidation Loan is a low-risk choice that makes your month-to-month funds extra manageable and permits you to retain some advantages. However, it gained’t enhance your rate of interest.

If you could have personal loans or a mixture of personal and federal loans, it’s price contemplating a personal student loan refinance. (In reality, it might be your solely choice, on condition that the federal authorities doesn’t consolidate personal loans). If you could have robust credit and powerful earnings, then you must be capable to qualify for a refinance—and probably save hundreds within the course of. However, bear in mind that it means giving up on the advantages connected to having federal loans.

When in search of a personal student loan refinance, all the time keep in mind to buy round. Doing a comparability of 3-5 lenders is an efficient manner of discovering enticing charges and studying which lender is best for you.

Want to do some extra analysis? Feel free to take a look at the remainder of our articles and lender comparability chart.