Whether you have federal or private student loans, you can consolidate what you owe and potentially save a significant amount of money. There are different benefits to each type of consolidation, so carefully consider which is right for you. 

Federal Consolidation: Slash Long-Term Debt
Your income determines your monthly payments when you opt for federal student loan consolidation. Under the standard 25-year agreement, your payments are based on variables like your shifting income and are capped according to your ability to pay. If you have a track record of consistent, on-time payments at the end of the agreement, any outstanding debt will be erased. This may be a particularly attractive option for students pursuing graduate degrees.

Private Consolidation: Nail Down a Bargain Interest Rate
When you borrow money from a private lending institution, your credit rating is one of the biggest factors in determining the interest rate you’re given. The problem is that most college students apply for a loan when they’re teenagers—before they’ve had the opportunity to boost their credit score. The result? Higher interest rates. When you choose private student loan consolidation, your newer, better credit rating translates into lower interest rates that can save you thousands of dollars. And even if your credit isn’t as spotless as it could be, interest rates fluctuate frequently, so you may be able to secure a lower interest rate based simply on more favorable current rates.

Refinancing: Cut Payments by a Third
Lowering your monthly payments by 33% or more could be just what the doctor ordered for people struggling financially. Defaulting on loans can seriously damage your credit rating, but refinancing student loans allows you to select a payment that fits your budget while protecting your credit. That’s accomplished by extending the period in which you’ll repay your loan. The vast majority of students have a standard 10-year loan repayment agreement that offers little flexibility. Refinancing allows you to choose 15-, 20-, or even 30-year repayment options that can significantly reduce your monthly payment. Think about what that extra money could mean for you right now.

It’s simple: Consolidating your student loans allows you to take control of your finances, saving you money now and maintaining a healthy credit rating that will continue to save you money throughout your life.