Reconsolidating a student loan

That’s what our Student Loan Smarts series is all about—helping you understand all of your options so you can make decisions that fit with your financial goals. Choosing to consolidate or refinance student loans.

But what is consolidation, what is refinancing, and how do you know which one (if either) is right for you? Here’s a simple overview of the different types of student loan consolidation, how they differ from student loan refinancing, and how to evaluate whether you should do one of these things.

Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D.

Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt.This is a somewhat complicated question, especially since these terms are sometimes used interchangeably. Federal loan consolidation Federal loan consolidation is offered by the government and is available for most types of federal loans—no private loans allowed.For example, consolidation simply means combining multiple student loans into one loan, but you get different results by consolidating with the federal government vs. Student loan refinancing is when you apply for a loan under new terms and use that loan to pay off one or more existing student loans. When you consolidate with the government, your existing federal loans are combined into one new loan with a new rate, which is a weighted average of your old loans’ rates. You can consolidate all, just some, or even just one of your student loans.Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.

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