Consolidating Private and Federal Student Loans

Many college grads have student loan debt from multiple sources. Usually, the biggest chunk of debt is owed to the U.S. Department of Education in the form of Federal Direct subsidized and unsubsidized loans. But, many students also have private student loans from companies like Sallie Mae (now Navient), Discover, or a local bank or credit union.

One benefit of refinancing your student loan debt is that many lenders will give you the option to consolidate your federal loans with any private loans to have one, single payment.

While consolidating these loans doesn’t necessarily save you any money, it can give you the option to finance the entire amount over a longer term, which can significantly reduce your monthly loan payments. In many cases, students can also qualify for a lower rate by refinancing, which will save them money over he life of the loan as they pay lower interest.

Federal loan consolidation

The U.S. Dept of Education allows students with multiple federal loans to consolidate these loans relatively easily.

Students can request and consolidate their loans online. But, there are some drawbacks.

  • Only federal loans qualify (not private loans)
  • Interest rate is a weighted average of your existing loans–you may not receive a lower rate

Consolidating will allow you to make one single payment on your federal loans, and it may allow you to qualify for a longer repayment period on your loans. You’ll pay less each month but more over the long term.

Consolidate private and federal loans

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Consolidating federal and private student loans

In order to combine both federal loans and private loans all into one payment, you’ll need to work with a private lender.

Luckily, the private lending market for student loan refinance is a growing industry that offers competitive interest rates, flexible repayment terms, and lots of additional perks like unemployment protection or even mentorship and career coaching.

If you’re looking to consolidate and refinance your loans, there are a number of potential lenders to choose from.

Finding the right lender for consolidation and refinance

When you’re in the market for a lender to refinance and consolidate your student loans, you’ll need to consider a number of factors:

  1. Interest rates
  2. Loan terms
  3. Borrower protections
  4. Loan servicing
  5. Additional perks/benefits
  6. Fees and additional charges

Ideally, you’ll want to find not only a great rate, but also a loan term that makes your payments manageable, without being so long that you’re paying your loan for the rest of your life.

Be sure you look past just the dollars and cents to also consider the reputation of the lender in a broader sense. Do they offer good service? What protections do you have in case you were to lose your job or be unable to make a payment? Are there any additional services or perks that come with refinancing through that particular company over another?

Top picks for student loan consolidation and refinance

We’ve researched dozens of companies and lenders to come up with a list of your top 3 picks for student loan consolidation and refinancing.


LendKey is a marketplace for not-for-profit local and regional credit unions and community banks. They let you quickly get a pre-qualified rate estimate and then compare multiple lenders.



Laurel Road

Laurel Road, a division of DRB, is a well-established lender that doesn’t shy away from big student loan debt. They’ve historically worked primarily with graduate students with $50k+ in debt! Offering competitive rates and a simple application process, Laurel Road is a great option for many students.




Competitive rates, incredible flexibility in terms and payment options, plus 12-months unemployment protection and lifetime loan servicing.