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Consolidation vs refinancing


Consolidation lets you combine multiple federal student loans into one loan with a fixed interest rate that’s a weighted average of your loans’ various interest rates. 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 Federal Direct Loans through, and private student loans through some private lenders. However, you can’t consolidate both federal and private loans through the federal program.


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

It may seem easier 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?

 This information was gathered on June 20, 2017, from

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