Consolidating or refinancing your student loans

Two options you might have heard about are consolidation and refinancing. While these terms are often used interchangeably, they’re different.

Consolidation vs refinancing


With a Direct Consolidation Loan, you can consolidate multiple federal student loans into one loan with a fixed interest rate that’s a weighted average of your loans’ various interest rates rounded up to the nearest one-eighth of one percent.footnote 1 You won’t necessarily get a lower interest rate with consolidation, but you’ll have the convenience of making just one payment.

You can consolidate most federal education loans through, and private student loans through some private lenders. However, you can’t consolidate both federal and private loans through the federal program.footnote 1


Refinancing occurs when a company buys all your current student loans and issues you a new loan to pay them all off. You’ll get a new rate but you may lose payment flexibility and special benefits that were available through the individual lenders or the government.

We don’t offer consolidation or refinancing at this time. We recommend that you consider the impact that these actions may have on your student loan benefits and Total Loan Cost.

Questions to answer before consolidating or refinancing student loans

You may want to make a single, lower monthly payment; however, before you decide to consolidate or refinance, you should consider the pros and cons of each option. Answer these questions before you act:

  • Are you saving money or are you just paying over a longer term, so you’ll end up paying more over the life of your loans?
  • Will you lose any current student loan benefits, such as repayment options or Public Service Loan Forgiveness?
  • Is your credit score sufficient for a lender to approve you for a consolidation or refinancing?
  • Will your new loan be considered a student loan or a personal loan? If it’s not a student loan, will you lose out on an interest tax benefit?
  • Will you have to pay any service fees to refinance your student loans?
  • Will you lose any discounts that you’ve had with your loan originator?

Related topics

footnote 1. This information was gathered on 04/14/23, from

footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

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