Although the terms are often used interchangeably, they are not the same thing.Student loan consolidation and refinancing both result in a single monthly bill, however student loan refinancing could result in significant savings.When I talk to people who are frustrated with their student loan debt and want to get rid of it as soon as possible, there’s one question that comes up over and over again: Should I consolidate my student loans?
Whom do I contact if I have questions about consolidation?There is no cap on the interest rate of a Direct Consolidation Loan.allows you to consolidate (combine) multiple federal education loans into one loan. Top Private education loans are not eligible for consolidation, but for some Direct Consolidation Loan repayment plans, the total amount of your education loan debt—including any private education loans—determines how long you have to repay your Direct Consolidation Loan.The result is a single monthly payment instead of multiple payments. Direct PLUS Loans received by parents to help pay for a dependent student’s education cannot be consolidated together with federal student loans that the student received.You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee. There’s no need to pay anyone for assistance in getting a Direct Consolidation Loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent.
The loans that were consolidated are paid off and no longer exist.In contrast, a refinance will leave you with a totally different interest rate – preferably a lower rate.There’s not much reason to refinance to a higher rate.A student loan consolidation will simplify your finances since you will only need to keep track of a single student loan bill each month.Keep in mind that with a student loan consolidation, you are not saving any money since you are just combining all your student debts into one.Consolidation vs Refinance Federal consolidations can only include federal loans, whereas private refinancing can encompass both federal and private student loans.