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Should I Consolidate My Student Loans or Refinance?

Should I Consolidate My Student Loans or Refinance?

4 Common Consolidation Questions Answered

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When you graduate https://worldpaydayloans.com/payday-loans-ar/pocahontas/ from college, you’re not alone leaving school with student loan debt. In fact, a 2020 study by Mark Kantrowitz estimates that undergraduates who graduated from college owe about $29,900 in student loans, on average. That number might be a result of taking out several student loans. Juggling all of those loans with different lenders, monthly payments, and bill due dates can be stressful.

If you’re looking to streamline your loans, loan consolidation and student loan refinancing are two options to consider. While the terms are often used interchangeably, they’re actually very different processes, each with their own unique benefits and drawbacks.

We’ve created this article to answer common student loan consolidation and refinancing questions, along with quick links below to jump to each section:

Should I Consolidate My Student Loans?

If you have federal student loans, you may have heard about Direct Loan Consolidation. With this option, you work with your federal loan servicer to combine your current loans into one large loan. There are some benefits to consolidating your loans:

Loans ineligible for loan forgiveness become eligible: If you have older federal loans, they may not be eligible for Public Service Loan Forgiveness (PSLF). When you consolidate them into a Direct Consolidation Loan, those loans may then qualify for PSLF consideration.

Loans ineligible for income-driven repayment plans become eligible: Similarly, some student loans are not eligible for income-driven repayment plans. But if you consolidate them, they qualify for plans like Income-Contingent Repayment or Pay As You Earn.

One of the most practical benefits of loan consolidation is that you have one easy payment. Instead of juggling multiple loans and monthly payments, going forward you’ll have one loan and one payment to remember.