These processes are often confused, but they’re very different.Here’s how: Federal loan consolidation doesn’t have a credit requirement, and it offers the benefit of a single loan bill and potentially lower payments.The goal with this process is not only to get the ease of a single payment, but to receive a lower interest rate based on your financial history.Consider refinancing if you have: Use Nerd Wallet’s student loan consolidation calculator to compare monthly payments under three different scenarios: federal student loan consolidation, private student loan refinancing and income-driven repayment plans.Take time to carefully consider if this type of loan is right for you.Consolidating all of your credit debt into one lump payment is very convenient.
Calculate both sides of the equation, however, before deciding. We believe everyone should be able to make financial decisions with confidence. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. " There are two types of student loan consolidation: federal and private. We’re on your side, even if it means we don’t make a cent.It’s also important to make sure the payment will fit into your budget, as some individuals will be offered higher interest rates than others. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Private consolidation is often referred to as refinancing.If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.Additionally, you’ll get a new loan term ranging from 10 to 30 years.Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.If your revolving credit card debt is keeping you up at night, you may be thinking about a credit consolidation loan.While consolidation can be a beneficial tool to have in your arsenal, it can backfire drastically if you don’t watch your step.