Consolidating private student loan debt
This is another area where student loan refinancing comes into play.
Student loan refinancing is different from student loan consolidation, but many people use the terms interchangeably and it can be confusing.
If you have Federal loans, you typically want to consolidate.
If you have private loans, you typically want to refinance.
When you have a Federal student loan, you can easily change your repayment plan by simply calling your lender or logging into Student
Federal loans offer a lot of repayment options, such as income-based repayments, graduated plans, and extended plans.
In fact, the student loan refinancing companies make this easy because they’ll pay off your old loans through the process of getting your new one.
However, private student loans don’t allow any flexibility in this.
If you want or need a lower payment, you have to get a new loan.
Student loan consolidation is a special program offered by the Department of Education to simply combine all your Federal student loans into a single Federal student loan.
Student loan consolidation only applies to Federal student loans, and it’s a free program. Student loan refinancing is the process of taking out a private loan to replace your other student loans.