Student Loan Consolidation vs. Refinancing Calculator FAQs
1. Will Direct Consolidation lower my interest rate and/or save money?
No, a Direct Consolidation Loan will not lower your interest rates or help you save money on interest directly. Rather, 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.
2. How do I calculate my average interest rate?
If you have multiple student loans, use our Weighted Average Interest Rate calculator to find your average interest rate.
3. What types of loans are eligible for each option (Direct Consolidation and refinancing)?
You may only consolidate federal student loans with a Direct Consolidation loan. Just about any type of federal student loan can be consolidated into a Direct Consolidation Loan.
Refinancing with a private lender is possible with both federal and private student loans.
4. What happens if I refinance federal student loans? Are there reasons I might not want to refinance?
Refinancing federal student loans will convert the loans to private student loans. This means that any refinanced loans will no longer be eligible for federal programs like student loan forgiveness, income-driven repayment, and federal deferment/forbearance.
For this reason we recommend borrowers think carefully about refinancing federal loans before they do so. You can read more about what considerations to make here. Additionally, some borrowers choose to refinance only their private student loans and leave their federal student loans as is.
5. Why does this calculator only work for federal student loans?
Private student loans are not eligible for Direct Consolidation, so they’re excluded from the comparison. To see how you can save by refinancing private student loans, check out our Refinancing Calculator.
6. What assumptions does this calculator make?
This calculator assumes:
- You’ll stay on the standard repayment plan when choosing a Direct Consolidation Loan. The repayment term on the standard plan varies based on the size of your student loan balance as follows:
If you wish to enroll in an income-driven repayment plan after obtaining a Direct Consolidation Loan, check out our Income-Based Repayment, Pay As You Earn, Revised Pay As Your Earn, and Income-Contingent Repayment calculators for estimated monthly payments.
7. How do I find student loan refinancing rates and terms?
See our top partners for refinancing student loans here to view available rates and terms. To get your rates, please visit the lender websites. Most of the lenders we’ve partnered with are able to check eligibility and provide a rate with a “soft” credit pull in just two minutes.
8. Should I refinance my student loans?
That depends on many different factors. We recommend reviewing these posts to help you decide for yourself:
Interested in refinancing student loans?
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