Can You Consolidate Private Student Loans?

Kat Tretina Published on January 8, 2020


“I keep forgetting to make my payments.”

“I can’t afford my student loan payments.”

“I can’t remember who my loan servicer is.”

Do any of these phrases sound familiar to you? According to Experian, the average graduate has $35,620 in student loan debt. With so much debt, you likely have multiple loans with several different loan servicers and monthly payments to remember. That’s a recipe for disaster; you can easily miss payments or lose track of your loans.

You may have heard about loan consolidation — where all your loans are combined — and thought it sounded like a perfect solution. But can you consolidate private student loans? Here’s what you need to know about your private student loan consolidation options.

Federal loan consolidation vs. student loan refinancing

While loan consolidation and student loan refinancing may sound similar, they’re actually very different processes and involve different types of loans.

Federal loan consolidation

With federal loan consolidation, you take out a Direct Consolidation Loan and use it to pay off your current loans and combine them into one. Going forward, you’ll have just one loan, one loan servicer, and one monthly payment to remember.

There are other perks, too. When you consolidate your loans, you can extend your repayment term and lower your monthly payment. And, you may be able to access programs you were previously ineligible for, such as income-driven repayment plans or loan forgiveness.

That all sounds great, right? Unfortunately, federal loan consolidation isn’t for everyone. Only federal student loans are eligible for a Direct Consolidation Loan. If you have private student loans, they don’t qualify.

Student loan refinancing

If you have private student loans, they’re ineligible for federal loan consolidation. However, consolidation of private student loans is possible through student loan refinancing.

With this strategy, you work with a private lender to take out a loan for the amount of your current debt, including both federal and private student loans.

Like federal loan consolidation, you can choose a new repayment term and lower your monthly payment. But in contrast to consolidation, refinancing your student loans might allow you to lower your interest rate, helping you save money.

4 reasons to use refinancing to consolidate private student loans

Private student loan consolidation can be a great way to manage your debt. There are five key benefits to consolidating private student loan debt:

1. You can save money

If you have good credit and a stable income, you could qualify for a lower interest rate when you refinance your private student loans. Over time, that lower rate can help you save hundreds or even thousands of dollars.

For example, let’s say you had $35,000 in student loan debt at 7% interest and a 10-year repayment term. By the end of your repayment term, you would have repaid $48,766; interest charges would cost you $13,766.

But if you refinanced your debt and qualified for a 10-year loan at just 5% interest, your savings could be significant. Over the course of 10 years, you’d repay just $44,548. By taking just a few minutes to refinance your loans, you’d save over $4,200.


Current Student Loan

Refinanced Student Loan




Interest Rate



Loan Term

10 years

10 years

Monthly Payment



Total Repaid



Total Interest



If you qualify for a lower interest rate, more of your monthly payment will go toward the principal rather than interest charges. If you keep paying the same monthly payment — rather than paying the minimum required after refinancing — you could pay off your loan months or even years earlier.

For example, let’s say you had the same loans mentioned above. Before refinancing, your monthly payment was $406. After refinancing, you qualified for a 10-year loan at 5% interest, and your monthly payment dropped to $371.

If you kept paying $406 each month instead of the required $371 — just a $35 difference — you would pay off your loans a whole year ahead of schedule. And, you’d save $1,103 in interest charges.

2. You can simplify your payments

To pay for school, you likely had to take out more than one loan. You may have multiple loans from different lenders, making keeping track of your payments and due dates overwhelming.

The consolidation of private student loans can streamline your debt. When you refinance your student loans, they’re combined into one. After that, you’ll have just one monthly payment to make to one loan servicer.

3. You can choose between variable-rate and fixed-rate loans

With student loan refinancing or private student loan consolidation, you have the option of choosing between a fixed-rate loan and a variable-rate loan.

Fixed-rate loans have the same interest rate for the length of your repayment; the interest rate never changes.

Variable-rate loans work differently. Their interest rates typically start off lower than fixed-rate loans, but they fluctuate with market changes.

If you want to pay off your debt aggressively, choosing a variable-rate loan can help you get the lowest interest rate possible and save money.

4. You can pick your own repayment term

When you refinance your loans, you can choose your own repayment term. Terms usually range from five to 20 years in length.

If you’re on a tight budget and have trouble keeping up with your payments, opting for a longer repayment term can give you a more affordable monthly payment. You’ll pay more in interest over time, but it may be worth it to get some breathing room in your budget.

Refinancing your student loans

While private student loans aren’t eligible for federal Direct Consolidation Loans, you can consolidate private student loans through student loan refinancing. By refinancing, you can save money, become debt-free earlier, and even lower your monthly payment.

To explore your private student loan consolidation options, use Purefy’s Compare Rates tool to get quotes from top student loan refinancing lenders.