Debt Relief

Student Loan Debt Consolidation Guide for Beginners: Understanding the Differences Between Private and Federal Consolidation and Refinancing

When it comes to student loan debt consolidation, there are two options: private and federal. Student loan refinancing is done through a private lender. Federal loan consolidation involves combing multiple student loans into a single federal loan via the DoE. This won’t lower your interest rate, and you might end up with extended, but lowered payments.

To help you understand the differences between the two options, here is a quick rundown:

Student Loan Consolidation

• Allows you to turn all of your student federal loans into a single federal loan
• Only federal loans can be combined
• no lowered rates, but the loan term might be extended, giving you extra time to pay it off
• You might be eligible for federal loan protections, forgiveness programs, and repayment options
• You’ll just have to pay one monthly bill

Student Loan Refinancing

• Allows you to combine federal and/or private loans into a single private loan
• Federal and/or private loans can be combined
• Rates can be lowered
• You can save money
• No eligibility for federal loan protections, forgiveness programs, and repayment options
• You’ll just have to pay one monthly bill

If you want to try student loan debt consolidation / refinancing with a private company, a few things that will dictate the interest rate you will receive include your credit score, job history, income, educational background, and financial history. It’s typically required that the applicant have a minimum credit score of the high 600s to qualify, and rates can range from 2% – 9%.

The plus side to federal loan consolidation is that it does not have a minimum credit score requirement. With it, you can still get the benefit of a single bill, which alone is worth trying to get for some students who can’t keep up with multiple bills every month. Since it’s a federal loan, however, it will not reduce your interest rate. This is an ideal option for those who have to consolidate in order to be eligible for public service loan forgiveness or income-driven repayment or are currently in default with their student loans and hope to get back on track.

When consolidating federal loans, the government will pay them off and replace them with a direct loan. If you want to try this option, the official site to check out is

Other options for student loan debt consolidation can be found with organizations such as College Avenue Student Loans, LLC and Earnest, both of which have a pretty good rating.

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