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Can You Consolidate Private and Federal Loans Together?
By
Kayla Korzekwinski
Kayla Korzekwinski is a Scholarships360 content writer. She earned her BA from the University of North Carolina at Chapel Hill, where she studied Advertising/PR, Rhetorical Communication, and Anthropology. Kayla has worked on communications for non-profits and student organizations. She loves to write and come up with new ways to express ideas.
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Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.
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If you are currently repaying both private and federal student loans, you might be wondering, “Can you consolidate private and federal loans together?” The short answer is – no, you cannot consolidate federal and private loans together. However, you can combine them through refinancing. Let’s get into the difference between those two terms. We’ll define each of them and describe their pros and cons.
Consolidating vs. refinancing
“Consolidating” and “refinancing” are often used interchangeably. However, there are some distinct differences between the two. Both involve combining multiple loans into one single loan. The lender pays off your existing loans and gives you a new one in exchange. However, consolidating is only possible among federal loans, whereas students can refinance either federal or private loans.
Related: Student loan consolidation vs refinancing: Pros and cons
Consolidating federal loans
Consolidation means combining multiple federal student loans. Department of Education loans are the only loans eligible for consolidation. Private loans cannot be exchanged for federal loans.
Why consolidate student loans?
If you have federal loans with multiple servicers, consolidating them can get you a single monthly payment. Consolidation can also lower the amount of your monthly payment by extending the repayment period. However, you’ll pay more in interest over the life of the loan.
Federal student loan consolidation also allows borrowers to combine multiple types of federal loans. This includes Direct, FFEL, PLUS, and Perkins loans. Consolidating FFEL or Perkins loans into a Direct Consolidation loan can make borrowers eligible to repay those loans on an income-driven repayment plan.
Refinancing private and federal loans
Refinancing is the consolidation of private or federal student loans. There are several banks and other financial entities that offer refinanced loans. The new lender you select will repay your loans in exchange for a single private loan. Federal loans can be combined with private loans by refinancing.
Why refinance student loans?
Refinancing private or federal student loans gives borrowers one monthly payment to one lender as opposed to several. Refinancing can also earn borrowers a lower interest rate. This will save you money over time.
See also: How often can you refinance student loans?
Keep in mind, however, that refinancing federal loans will cause you to lose access to the benefits that come with them. You’ll lose access to income-driven repayment plans, Public Service Loan Forgiveness, and lenient deferment and forbearance options. If you plan on taking advantage of any federal student loan benefits, you can refinance only your private loans and keep your federal loans.
Summing it up
Consolidation
Key Takeaways
Refinancing
Key Takeaways
Refinance private and federal loans together
So, although you cannot consolidate federal and private loans together, you can refinance them. With the option of lower interest rates, this could save you a substantial sum of money. However, it could also cause you to lose flexible repayment options. Always be sure to read over the conditions of a loan agreement very carefully before signing, and shop around to choose the lender that best fits your financial needs!
Related: Search and compare private student loans
Frequently asked questions about consolidating private and federal loans
Can subsidized and unsubsidized loans be consolidated together?
What loans are eligible for consolidation?
Can consolidated loans be deferred?
Can I consolidate my loans for PSLF?
