Student loan consolidation and refinancing are quite different but the words are often used interchangeable. Student loan consolidation is the process of combining multiple federal student loans into one consolidation loan. Student loan refinancing is combining either private and/or federal loans into one new loan. Both consolidation and refinancing offer the benefit of a single payment.
If you have both federal and private student loans you cannot consolidate the different loan types together under the federal consolidation program. You can refinance both federal and private loans together through a private lender.
Federal Student Loan Consolidation
You can consolidate all your federal student loans into one loan. Federal consolidation loan interest rates are weighted average of the interest rates of all your federal loans. It may result in a lower rate for some of your loans or a higher rate for others but the weighted average balances the rates. Consolidation has federal repayment benefits that can help you reduce your monthly payments based on financial hardships.
Private Student Loan Refinancing
When you decide to “consolidate” your private student loans you are taking on a new loan that will pay off existing loans. A student loan refinance will give you a new loan with new interest rates and terms. There is no federal program that allows you to refinance federal and private loans together but you can choose from a number of private lenders who offer student loan refinancing. You can choose to refinance just your private loans into a new private loan or refinance both federal and private loans together.