Student Loan Consolidation: Know Your Options

Loans to fit your budget

Below are sample payments for a $25,000 loan using each of Education Loan Finance’s student loan refinance options. The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different than the rates in these examples and will be based on the term of the loan, your financial history, and other factors, including your cosigner’s (if any) financial history.

To qualify for refinancing or student loans consolidation through Education Loan Finance, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. All rates are subject to change without notice. All loans are subject to credit approval. Additional terms and conditions apply.

Student Loan Consolidation Options: Consolidation vs Refinancing

If you want to combine multiple student loans, there are two options: Federal student loan consolidation through the government or consolidation with a private lender (also known as refinancing).

When you consolidate your federal student loans through the Federal Loan Consolidation program, you’ll receive a new interest rate based on the weighted average of your existing rates rounded up to the nearest eighth of a percent. The benefit of federal student loan consolidation is that it makes your payment schedule easier to track, especially if you’re paying down several different student loans.

If you’re looking to save money on interest costs, however, student loan refinancing is a better choice. Instead of averaging your interest rates, you’ll receive a new rate based on your credit score, debt-to-income ratio, and other factors.

Student Loan Consolidation Options: Consolidation vs Refinancing

If you want to combine multiple student loans, there are two options: Federal student loan consolidation through the government or consolidation with a private lender, also known as student loan refinancing.

When you consolidate your federal student loans through the Federal Loan Consolidation program, you’ll receive a new interest rate based on the weighted average of your existing rates rounded up to the nearest eighth of a percent. If you’re looking to save money on interest costs, however, student loan refinancing may be a better choice. Instead of averaging your interest rates, you’ll receive a new rate based on your credit score, debt-to-income ratio, and other factors. You can also adjust your loan term to extend repayment or shorten it.

Consolidate Private Student Loans

If you want to consolidate private student loans or a combination of private and federal student loans with a private lender, this is called student loan refinancing. When you refinance, you combine the loans you choose into a new, single loan that typically has a new interest rate and loan term. One of the benefits of refinancing student loans is that it allows you to potentially save money in interest costs by lowering your rate. Refinancing can help lower your monthly payment or pay off your student loans faster.

The interest rate that you qualify for when refinancing depends on a number of factors like your credit score, credit history, and debt-to-income ratio. You must also meet certain criteria in order to qualify. Learn more about ELFI’s student loan refinancing eligibility requirements.

Should I Consolidate My Student Loans?

As mentioned above, there are a number of factors to consider when deciding whether federal student loan consolidation or student loan refinancing is right for you.

In short, federal student loan consolidation is a good option to combine multiple federal student loans into one loan with a single monthly payment. A benefit is that you keep access to federal student loan benefits like loan forgiveness and income-based repayment options. Student loan refinancing, on the other hand, allows you to combine both federal, private or a combination of the two types of loans into a single loan with one monthly payment. The main benefit of refinancing is that you may be able to lower your interest rate, saving you money over the life of your loan, and you can adjust repayment terms to fit your specific goals. The main drawback is that you lose access to benefits offered by the federal student loan program.