When you consolidate student loans, you’re combining multiple loans together into one single loan, with one payment. You’re still paying the same total amount and same total interest. You now just have one loan instead of multiple loans.
When you refinance student loans you basically consolidate them into a single loan with a new interest rate, new terms, and monthly payment amount. The lender will evaluate you and your creditworthy cosigner’s (if applicable) financial information to offer you a new low and a lower rate. Read about the differences between student loan consolidation and student loan refinancing to learn more.
If you want to combine your Federal and private student loans together, you have to do it through a private lender. The Federal Direct Consolidation Loan program does not consolidate private loans into Federal loans. However, many lenders in our network do allow you to combine your private and federal loans into one payment. This page breaks down what you need to know about consolidating and refinancing your federal and private student loans together.
The interest rate is simply the percentage of the loan amount that is charged for borrowing money. The APR reflects not only the interest rate, but also any other fees charged by the lender. The APR represents the total cost of borrowing and for that reason is usually higher than the interest rate.
While you may apply on your own, applying with a creditworthy cosigner can make all the difference when it comes to a loan application’s chances for success and approval—and even result in a lower rate.
A fixed rate student loan is one that maintains the same interest rate on the loan for the entire life of the loan. A variable rate student loan is where the interest rate can adjust each month based on the current interest rates available. Whether you choose a fixed or variable rate, it’s always important to remember to pick a loan that is right for you and your particular financial situation. Remember that interest rates could rise higher than the past highs. If you’re comfortable assuming a little more risk in your payment amount, a variable rate loan does have the potential to offer savings.