Geeky Tools:

Student Loan Consolidation vs. Refinancing Calculator

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When you're looking to consolidate your student loans, you have two options: a Direct Consolidation Loan or Refinancing with a private lender. Both options will combine your student loans into one new loan with one monthly payment. To find out which option suits your best, use our Consolidation vs. Refinancing Student Loan Calculator (for federal student loans only).

Step 1: Current Loan Info
Federal student loan balance
$
Average interest rate
%
Current monthly payment
$
Step 2: Refinancing Info
New interest rate
%
New loan term (years)

Which is right for you?

Plug in some numbers and see if consolidating or refinancing makes more sense.

Remember: Consolidating doesn't lower your monthly payments.

Geek out with some quick facts.

Start with the basics.

Student Loan Consolidation

Student Loan Refinancing

What does it do?

Combines multiple federal loans into one federal loan

Combines private and/or federal loans into one private loan

Which loans can I combine?

Only federal loans

Federal loans and private loans

Can I lower my interest rates?

No

Yes

Will I be able to save cash?

No. Consolidation just takes the weighted average of all your interest rates, it will not lower it

Yes

Can I use federal programs like forgiveness or Income-Driven repayment plans?

Yes

No

Is there just one monthly bill?

Yes

Yes

How much does it cost?

Nothing. It's free.

Nothing. It's free.

The Best Student Loan Rates of 2020.

DollarGeek has done the work for you. We’ve sorted through the best student loan lenders and made refinancing your student loan simple. Don’t take the passive approach, start saving thousands by refinancing your student loan today.

Showing 1-7 of 7 accounts Advertising disclosure
OVERALL RATING:
(5)
on College Ave's website

Variable Rate

2.94% - 4.84%

varies on credit

Fixed Rate

2.99% - 4.94%

varies on credit

Variable Rate

2.94% - 4.84%

Fixed Rate

2.99% - 4.94%

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OVERALL RATING:
(4.5)
on CommonBond's website

Variable Rate

1.99% - 5.61%

varies on credit

Fixed Rate

2.98% - 5.79%

varies on credit

Variable Rate

1.99% - 5.61%

Fixed Rate

2.98% - 5.79%

+ Show More Details
View Details
OVERALL RATING:
(4.5)
on Earnest’s website

Variable Rate

1.88% - 5.64%

varies on credit

Fixed Rate

2.50% – 5.79%

varies on credit

Variable Rate

1.88% - 5.64%

Fixed Rate

2.50% – 5.79%

+ Show More Details
View Details
OVERALL RATING:
(5)
on LendKey's website

Variable Rate

1.98% - 8.55%

varies on credit

Fixed Rate

2.99% - 8.77%

varies on credit

Variable Rate

1.98% - 8.55%

Fixed Rate

2.99% - 8.77%

+ Show More Details
View Details
OVERALL RATING:
(4.5)
on Splash's website

Variable Rate

1.98% - 7.10%

varies on credit

Fixed Rate

2.88% - 727%

varies on credit

Variable Rate

1.98% - 7.10%

Fixed Rate

2.88% - 727%

+ Show More Details
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OVERALL RATING:
(4.5)
on SoFi's website

Variable Rate

2.24% - 6.39%

varies on credit

Fixed Rate

2.74% - 6.74%

varies on credit

Variable Rate

2.24% - 6.39%

Fixed Rate

2.74% - 6.74%

+ Show More Details
View Details
OVERALL RATING:
(4.5)
on PenFed's website

Variable Rate

2.99%-5.15%

varies on credit

Fixed Rate

2.25%-4.61%

varies on credit

Variable Rate

2.99%-5.15%

Fixed Rate

2.25%-4.61%

+ Show More Details
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Which is better? Student Loan Consolidation or Student Loan Refinancing?

When you look at both of these options, refinancing and consolidation describe the same thing: turning multiple loans into a single, new loan. If you go through a private student loan lender you may see a lower interest rate. If you consolidate your federal loans through the government (Direct Consolidation Loan), you won’t receive a lower interest rate, but you may qualify for loan forgiveness programs or Income-Driven Repayment (IDR) plans.

What is Student Loan Consolidation?

When you consolidate your federal student loans, you are essentially applying for a Direct Consolidation Loan from the federal government. A Direct Consolidation Loan will let you combine multiple federal student loans into a new loan with one monthly payment and a new interest rate (weighted average). With a Direct Consolidation Loan, your interest rate is equal to a weighted average of the interest rates of your existing federal student loans (rounded up to the nearest 1/8%). It’s important to note that when you consolidate, you aren’t saving money, you’re just making your life a little easier by combining your multiple federal loans into one.

What is Student Loan Refinancing?

Student loan refinancing is the process of obtaining a new loan at a new interest rate from a private lender (aka not the government). You’ll be able to refinance both your federal and private student loans, which involves paying off your old loans and getting a new one with typically a better interest rate and different payment terms (usually anywhere from 5-20 year durations). Curious to see if you’ll save money by refinancing? Check out DollarGeek’s student loan refinancing calculator, it will give you an idea of how much you can save on your student loan.

It’s important to remember that student loan refinancing is different than consolidation. Consolidation typically refers to taking out a Direct Consolidation Loan and combining all your federal student loans into one loan with one interest rate.

While there are some similarities with refinancing, consolidation (aka a Direct Consolidation Loan) doesn’t offer any interest savings, only refinancing with a private lender can lower your interest rate.

If you have private and federal student loans, refinancing is a good option because private student loan borrowers aren’t eligible for consolidation. Consolidation is only good for federal loans. So, in short, if you have private loans, you’ll only be able to refinance your student loans with a private lender.

Will Student Loan Consolidation (Direct Consolidation Loan) lower my interest rate or save me money?

No, it won’t. A Direct Consolidation Loan will not lower your interest rates or help you save money on interest directly. A Direct Consolidation Loan combines your loans with a weighted average interest rate of your old loans. This means that you’ll still pay the same amount of interest on your loans as it’s an average. Remember, the advantage of a Direct Consolidation Loan is that you combine all your loans into one monthly payment.

If I do a Direct Consolidation Loan, how do they average out my interest rate?

They will use the weighted average (important to note: weighted average is different than a regular average). Use DollarGeek’s weighted average interest rate calculator and get an idea of what your consolidated interest rate could look like.

Does Student Loan Consolidation cost me anything?

Nope, it’s free.

Does Student Loan Refinancing cost me anything?

Nope, it’s free.