Introduction: Guide to Student Loan Consolidation and How to Find the Best Rates to Consolidate Student Loans


Racking up a sizeable amount of college debt is fairly easy to do because of the rising tuition rates and the numerous other expenses associated with getting a university degree. 

The competitive job market might even force you into getting a post-graduate degree just to find a decent paying job.  After six to eight years of study and several student loans, finding a student loan consolidation plan might seem like the best way to manage your debt. 

Finding the best student loan consolidation plans can be difficult, especially if you have a mix of federal and private loans. 

While federal student loan consolidation programs are offered by the government, you might be able to find better student loan consolidation rates for your private loans elsewhere. 

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Image Source: Student Loan Consolidation

In this brief article, we will explain what it means to consolidate student loans and why it is important to research the best ways to consolidate your school loans. 

We will then look at the difference between federal student loan consolidation and the process of learning how to consolidate private student loans. 

Finally, we will offer a few tips on how to best manage your school loan consolidation, including programs to help you consolidate federal student loans and a few options for the best private student loan debt consolidation. 

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What Does It Mean to Consolidate School Loans?

If you are like most student, your meager earnings from a part-time job and the small scholarships you received weren’t enough to cover the rising costs of tuition, food, housing, books, and other expenses related to life in college. 

To finance your education, you probably took out several school loans from both private lenders and federal student loan programs. 

By the time you graduate from college and start to pay off those loans, it can be a mess trying to manage multiple loans, all with different due dates and monthly payment amounts.  Student loan consolidation programs allow you to combine all of those loans into one, concrete loan to help you better manage your student debt. 

Deciding to consolidate your student loans will make life easier, especially if you have been falling behind on payments because of the confusion that the stack of bills can cause for many college graduates. 



Furthermore, the best student loan consolidation can also help you reduce the interest rate you’ve been paying.  Student loan consolidation rates can be considerably lower, especially if your original school loans are over a decade old.

 Since interest rates have been falling during recent years, student loan consolidation can end up saving you money in interest payments. 

We’ll explore below the differences between government student loan consolidation and private student loan debt consolidation.

For now, however, it’s important to understand that many federal loan consolidation programs are especially helpful for college graduates who find themselves in financial turmoil and are simply unable to meet their payments.  Federal student loan consolidation, then, may very well be able to help you come up with a payment plan that takes into account your temporary financial setback.

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Why Should You Search for the Best Places for Student Loan Debt Consolidation?

When it comes to finding the best places to consolidate student loans, it is definitely worth your time to research the best options out there.  Unfortunately, there are many predatory lending agencies that take advantage of young people looking for the best way to do a school loan consolidation. 

One of the most common scams when it comes to federal loan consolidation is an individual financial advisor or company offering to help you with your federal student loan consolidation for a fee.  This is a scam because the only way to consolidate federal student loans is through the Federal Direct Consolidation Program. 

The process of government student loan consolidation is simple and straightforward and something you can easily do on your own. 

We’ll go into the specifics of federal loan consolidation programs below, but beware of individuals or companies who want to charge you a heavy fee for federal student loan consolidation when you can consolidate student loans from the government on your own in about half an hour.

Furthermore, it is important to search for the best places for student loan consolidation because many so-called student loan consolidation experts will charge you an upfront fee to help you consolidate school loans. 

According to Forbes magazine:

“This scam involves a company offering to lower the interest rate on your student loan in exchange for a fee up front. They will typically ask for the fee in exchange for them negotiating on your behalf with your student loan servicer…Instead, legitimate lenders will take a fee at closing of the loan, typically from the loan amount so you actually pay nothing out of pocket.”

Instead of relying on less than trustworthy companies offering to help you consolidate student loans, with a little bit of research and effort, you can easily manage your student loan debt consolidation.

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Difference Between Federal Student Loan Consolidation and Consolidating Private Student Loans

The first thing you should be aware of when it comes to student loan consolidation is the difference between federal student loan consolidation and private school loan consolidation.  We’ll explore the differences in detail below.

How to Consolidate Federal Student Loans

Federal loan consolidation is usually preferred over using a private lender.  While private lenders may be more than willing to help you consolidate federal student loans, you will lose out on a number of perks that come with federal loans if you go this route. 

For example, Perkins loans allow for complete debt forgiveness if you join the military or the Peace Corps.  If you decide to consolidate federal student loans with a private lender, you will lose out on that beneficial option. 

Furthermore, you may be able to apply for income-based repayment options if you have a Perkins, Stafford, or Grad Plus loan.  These repayment options are usually not offered by private lenders offering to help you consolidate student loans. 

According to U.S. News, federal loan “consolidation could help borrowers gain access to forgiveness options such as the Public Service Loan Program, as well as the Pay-As-You-Earn repayment plan.” 

Federal student loan consolidation can be done through the Federal Direct Consolidation Program. Their website is easy to understand and will direct you through the step-by-step process of federal student loan consolidation. 

How to Consolidate Private Student Loans

If you only have private student loans or a combination of private and government student loans, then you can consider student loan consolidation with a private lender. 

As a rule of thumb, you should never consolidate federal student loans with a private lender if your original loans have a decent interest rate or if you plan on using any of the federal student loan features, such as deferment and forbearance policies, loan forgiveness programs, or lower repayment plans. 

The only time you should plan to consolidate student loans that are a mix of private and federal loans is when your federal student loans have an interest rate considerably higher than the current average interest rates offered by student loan consolidation lenders. 

For example, if you have a student loan that is over a decade old, you may be paying upward of 8% interest on that loan.  Though your federal loan may come with certain perks, you most likely will be able to find student loan consolidation lenders who can help you consolidate your student loans into a much lower rate that could save you quite a bit of money.

There are a number of companies out there offering to help you consolidate school loans.  We will review two of the best student loan consolidation lenders below.  Whichever private lender you choose, you will want to make sure you’re getting a lower interest rate, receiving a favorable loan term, and not being charged any excessive hidden fees to consolidate student loans.

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How to Find the Best Student Loan Consolidation Rates

If you are convinced that student loan consolidation is the best way to help you manage your debt, below you’ll find a few hints to help you find the best federal student loan consolidation programs as well as information on two of the best private lenders to help you consolidate student loans. 

Helpful Federal Loan Consolidation Programs

One of the most helpful federal student loan consolidation programs is called “Pay as You Earn” (PAYE).  The PAYE program can help you lower your monthly payments if you can prove that you have some sort of financial hardship that makes it impossible for you to pay what you currently owe on a monthly basis.

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Image Source: Student Loan Application

This federal student loan consolidation and refinance program is actually divided into four separate programs which can be adapted to your personal financial situation.  

  • Revised Pay as You Earn Repayment Plan (REPAYE Plan)
  • Pay as You Earn Repayment Plan (PAYE Plan)
  • Income-Based Repayment Plan (IBR Plan)
  • Income-Contingent Repayment Plan (ICR Plan)

You can find out if any of these federal student loan consolidation programs is for you by visiting the Federal Student Aid website

Furthermore, if you have a Federal Family Education Loan (FFEL), there are a few options for your federal student loan consolidation. 

Collegescholarships.org advises:

“While you’re usually expected to use an FFEL consolidation loan if you have only FFEL loans, there are a few special circumstances under which you can substitute a Direct Consolidation Loan. You must have failed to secure an FFEL consolidation loan, secured one that does not offer a repayment plan tailored to your income, or have plans to submit your debt to the Public Service Loan Forgiveness Program.”

School Loan Consolidation Plan from Wells Fargo Bank

If you do plan to consolidate student loans with a private lender, Wells Fargo Bank is a well-trusted name that has helped thousands of students with their student loan consolidation. 

There are no application fees or early repayment fees if you consolidate your student loans with Wells Fargo, and you may even be able to apply for helpful interest rate discounts depending on your personal financial situation.

Student Loan Consolidation with SoFi

Social Finance, or SoFi, is another private lending agency that can help you consolidate student loans.  They offer both variable and fixed rates on student loan consolidation, while government student loan consolidation only offers fixed rates.  Furthermore, you may be able to get a variable rate starting as low as 2.22%, much lower than any federal student loan consolidation you could find. 

SoFi also offers flexible student loan consolidation terms of 5, 7, 10, 15, and 20 years, and you can consolidate student loans from both your undergraduate and graduate studies.

Read More: Federal Student Loan Forgiveness | How to Get Rid of Your Federal Loan



The Best Student Loan Consolidation Programs Can Help Get You Out of Debt

If you are looking for the best student loan consolidation programs for both federal student loan consolidation and private student loan consolidation, don’t simply trust a company that labels itself “expert” in student loan consolidation. 

The information is out there, and with a little bit of time and dedication, you can easily consolidate your student loans and benefit from a lower interest rate and a more manageable payment scheme to help you get out of student debt quicker. 



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