Refinance rates with Laurel Road start at 1.89%.
Checking your rates won’t affect your score.
Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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Student loan consolidation can combine all your federal loans together for one easy monthly payment. Plus, it gives you the chance to reduce your monthly payments by extending your repayment term, which can help you get out of default (or avoid it in the first place).
But while there are benefits, student loan consolidation is not always the best option for everyone. Let’s consider the following…
- When consolidating student loans is a bad idea
- When consolidating student loans is a good idea
- Understand the difference between consolidating and refinancing
While there are some good reasons to pursue this strategy, consolidating student loans isn’t always a good idea.
Note that we’re referring to direct loan consolidation here, which involves combining your federal loans and choosing a new repayment plan. Refinancing can also combine several loans into one, but it’s a different process that’s done with a private lender and typically results in a lower interest rate.
With that in mind, here are five times to avoid a direct consolidation loan:
1. Consolidating could raise your interest rate
2. Choosing a long repayment term will make your loan more expensive
3. You can’t consolidate private student loans
4. Student loan consolidation could hurt PSLF payments
5. You could lose benefits
When you apply for a direct consolidation loan, you bundle your federal student loans into one new one. While this can simplify repayment, it could raise your interest rate slightly.
Your new interest rate will be the weighted average of your old rates rounded up to the nearest one-eighth of a percent. To estimate what your new rate would be, use our weighted interest calculator. You can also use our student loan payment calculator to estimate your long-term interest costs with your new rate.
Consolidating can also increase interest costs by causing capitalization to occur. When your interest capitalizes, it gets added on to your principal balance. You pay back the larger amount, so you’re essentially paying interest on your interest.
Both the slightly increased rate and capitalization could lead to higher interest costs for you.
When you take out a direct consolidation loan, you have the chance to choose new repayment terms for your loans. Going with a long term of 20 or 25 years may lower your monthly payments, but it also means you’ll pay more interest in the long run.
Let’s say you’re paying off $35,000 at a 5.05% rate on a 10-year term. If you extend your terms to 20 years, you’ll end up paying an additional $11,019 in interest. If you go with 25 years, you’ll pay $17,038 more in interest.
While this move might make sense if you need to lower monthly payments, it’s not so helpful if you’re trying to save on interest. That said, you can always make extra payments to pay off your loan faster without penalty.
In general, private student loans aren’t eligible for direct consolidation loans. So if you’re planning to consolidate to simplify repayment, remember that your private student loans won’t get combined with your federal ones.
Note that you can combine private and federal student loans when you refinance with a private lender. If you can meet credit and income requirements — or apply with a cosigner who can — you could potentially qualify for a lower interest rate, too.
But refinancing federal loans turns them private, making them ineligible for future direct consolidation loans or other federal plans. As such, you should make sure you understand what you’d be sacrificing before refinancing any federal student loans.
According to the Department of Education, you’ll lose credit for payments already made through Public Service Loan Forgiveness (PSLF) or income-driven repayment plans, like Income-Based Repayment, if you consolidate your student loans.
PSLF forgives federal student loans after 10 years of working in public service. But if you consolidate your loans, you reset the clock on your repayment term, even if you’re already a few years into an income-driven repayment plan.
If you’re already a year or more into your pursuit of PSLF, be careful not to lose your progress through student debt consolidation.
Student loan consolidation could also result in the loss of certain benefits. As mentioned, you could lose your progress toward loan forgiveness when you consolidate. Plus, you might have to say goodbye to interest rate discounts you’re currently receiving.
You could also lose your student loan grace period, which typically lets you delay repayment of your loan up to six months after you graduate. To avoid this, you can ask your loan servicer not to process your consolidation application until the end of your grace period is near.
Finally, Perkins loan recipients could become ineligible for Perkins loan forgiveness if they consolidate.
Before applying for student debt consolidation, make sure to ask your servicer if you’ll lose any benefits. If you will, consolidating student loans might not be a good idea.
While we’ve focused on the potential downsides of consolidating student loans, there are benefits to this approach, as well.
If the idea of having one payment every month sounds enticing, student loan consolidation might be for you. It can be overwhelming and confusing to have many payments to a bunch of loan providers, so it can simplify things to concentrate on a single loan payment.
Consolidating your student loans also won’t affect your credit score much. Federal consolidation doesn’t incur a credit check, so it won’t hurt your credit score.
If you qualify, consolidating federal loans also gives you the freedom to get on an income-driven repayment plan or extended plan, which could make your monthly payments more affordable.
Consolidating also lets you switch to a new federal loan servicer, which might be a welcome change if your current loan servicer has been unhelpful or difficult to work with.
Finally, applying to consolidate student loans is one way to get them out of default and back into good standing. The other is to apply for student loan rehabilitation.
If these pros outweigh the potential cons, student loan consolidation could be a good idea.
While we’ve focused on federal student loan consolidation, it’s not the only way to combine several loans into one. You can also combine your loans, whether federal or private, through student loan refinancing.
One of the benefits of refinancing is potentially lowering your interest rate. If you or your cosigner have strong credit, you could qualify for a lower rate than you have currently.
Plus, you can choose new repayment terms, usually between five and 20 years. Changing your terms will adjust your monthly payment, allowing you to pay a bill that works with your budget.
But as mentioned, refinancing federal student loans makes them private, so you’ll lose access to federal protections, such as income-driven repayment plans and PSLF. Make sure you don’t need any federal benefits before refinancing federal loans.
If you’re not sure if it’s better to consolidate student loans, refinance or leave your loans alone, our consolidation versus refinancing calculator can help.
Rebecca Safier contributed to this article.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.