Consolidating a federal student loan

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Most federal loans are now made through the Direct Loan program.Federal Direct Loans are made directly by the federal government to students.

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But what is consolidation, what is refinancing, and how do you know which one (if either) is right for you? Here’s a simple overview of the different types of student loan consolidation, how they differ from student loan refinancing, and how to evaluate whether you should do one of these things.Read the other posts in the series here—and get all the info you need to make intelligent decisions about your student loans.And while you’re at it, check out So Fi’s new Student Loan Debt Navigator tool to assess your student loan repayment options.Private loan consolidation Like federal consolidation, a private consolidation loan allows you to combine multiple loans into one, and offers the same potential benefits listed above. Choose a variable interest rate loan, which can be a cost-saving option if you plan to pay off your loan relatively quickly. Enjoy the benefits of consolidation, including one simplified monthly bill.However, the interest rate on your new, consolidated loan is not a weighted average of your old loans’ rates. Unlike consolidation, student loan refinancing is only available from private lenders.

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