Refinancing Or Consolidation

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Although most people use refinancing and consolidation interchangeable, there is a difference. Know the difference because choosing one option may cause you to lose some federal repayment benefits.

A student loan consolidation is a process of combining one or more federal student loans into a single new federal consolidation loan. Consolidation can simplify the repayments by combining multiple payments into one. With a federal student loan consolidation, the average interest rate of all loans consolidate becomes your new interest rate.

You cannot consolidate private student loans into a federal student loan consolidation program.

Don’t confuse Federal student loan consolidation with student loan refinancing options through a private lender.

A private lender can “consolidate” both private and federal loans by refinancing into a new loan. The new loan will have new terms, interest rates, and conditions. Unlike the consolidation of federal loans into the federal consolidation program, private lender refinancing requires credit approval.