could make repayment easier. Consolidation and refinancing work differently, though, so be sure to understand each process.
If you want to group all your federal student loans into one big loan, you could get a Direct Consolidation Loan from the Department of Education. Direct Consolidation Loans only allow you to consolidate federal loans, not private loans. Your interest rate equals a weighted average of all consolidated loans, so you don't reduce interest costs with this approach.
Refinancing student loans with a private lender is another alternative, and one that could actually allow you to reduce your interest rate if you qualify for a new loan at a rate below what you're currently paying. Both federal and private loans can be consolidated, although consolidation of federal loans means giving up income-based payment options, the possibility of Public Service Loan Forgiveness, and other borrower protections.
Refinancing can simplify repayment by giving you just one loan to pay, can reduce your monthly payment, and can reduce the total owed — but only refinance private loans unless you're certain you won't use borrower protections of federal loansWhen you've got your loan with a private lender, you have to stick with the payment plan you agreed to when you took out the loan unless you refinance.
Be certain to research each different payment option and consider both what your current monthly payment will be and how much total interest you'd pay over time. Switching to a longer repayment timeline frees up more money today to do other things, but the trade-off is that you pay more interest in the long run.Once you've chosen a payment plan, set up autopay for all of your student loans.
themotleyfool Student loans need to be underwritten in a similar manner to mortgage loans, with an emphasis on ability to repay. Someone getting a degree in a field with little job opportunity should qualify for less than someone getting a degree in a field where there is demand!
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