How Federal Consolidation Differs From Private Loan Consolidation

Consolidating is a way to combine all your loans into one. There are some differences between consolidation types

Flickr user veganstraightedge

Consolidating your loans is one of the best alternatives if you are looking for a way to simplify your monthly student loan payments and make them more manageable. When you consolidate your loans, you only have to keep track of one payment to be made on one date every month.

You can consolidate federal student loans as well as private student loans. In both cases, all your individual loans are combined into one single new loan but there are a few differences between the two.

Federal Student Loan Consolidation

Federal consolidating is straightforward—you combine all your individual federal loans into one single loan. The new loan is called a Direct Federal Consolidation Loan. All federal student loans qualify for it.

Just as your original loans, some Direct Consolidation Loans may also qualify for income-based repayment plans as well as forgiveness programs. The interest rate on the new loan is the average of the individual rates of your original rates.

There are no fees associated with federal consolidating.

Lendkey company logo.

Reduce monthly payments by up to $191

Variable rates from 1.90% - 5.25% APR with auto-debit

Learn More

Private Student Loan Consolidation

With private loan consolidation, there is no one rule governing the eligibility or requirements. Every lender has their own stipulations regarding loan refinance and consolidation. Some lenders may require you to borrow a minimum amount to qualify, while others may assess your creditworthiness before approving of your application.

One of the potential benefits of private loan consolidation is that if you have a good credit history and are earning a regular income, you could qualify for a lower rate of interest with your consolidated loan.

Some private lenders charge origination fees for consolidating.

If you’re considering refi or consolidating, check out College Raptor’s free guide of top lenders!


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.88% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.64% - 5.65%*
Fixed APR: 2.25% - 5.75%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.96% - 7.02%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 5.97%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 5.33%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.84%*
Fixed APR: 2.99% - 4.94%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

Leave a reply

Your email address will not be published. Required fields are marked *