Student loan consolidation is exclusively for federal student loans. In student loan consolidation, the U. Department of Education pays off your existing federal student loans and replaces them with a Direct Consolidation Loan. But if you choose to refinance student loans, a private lender will pay off your existing student loans and give you a private student loan. But how do you know if consolidatung or consolidating is a better choice for you?
Switching from a variable-rate to a fixed-rate loan Lowering the monthly payment amount Getting into an alternate repayment plan Graduated repayment monthly payments start low, then increase Income-sensitive repayment monthly payments are a percentage of pretax income Getting borrower benefits Paying more in total interest Having a larger total loan repayment amount Being in debt longer if you extend your loan period Losing borrower benefits from your current lender i. Advantages of Consolidating Note that some consolidation pros apply just to federal loans or just to private loans. This is one reason that, if you have both types of loans, you may want to consolidate them separately see below. Also. You can also always keep separate a single loan that has especially good borrower benefits. Applies to all loans Streamlining your bill payment process.