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How Consolidating Student Loans Can Still Save You Money

Sara Cantu
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Before You Read, Lower Your Student Loan Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.
Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Paying for college isn’t easy. With the costs of a college degree rising, many students are faced with some difficult decisions when it comes to how they will pay for it all. For the vast majority of students, the answer is student loans.

But student loans, while helpful in paying for school, come with their own unique set of challenges. Repayment can cause significant financial strain for college grads. Not to mention the hassle and headache of paying off multiple types of student loans with different loan servicers, interest rates, monthly payment amounts, and due dates.

That’s why student loan consolidation is such a popular repayment strategy for graduates. It makes student loans easier to handle with just one payment and one due date to remember.

The only problem? Consolidating student loans through the federal government — AKA a Direct Consolidation Loan — doesn’t save you money or provide you with more favorable terms. It simply combines your federal student loan debts.

However, consolidating student loans through a private financial institution — AKA student loan refinancing — provides additional benefits beyond consolidation including the opportunity for lower rates to save big on lifetime interest.

Learn more about what student loan consolidation is, which method of consolidation is best for you, and the benefits of consolidating student loans.

What is student loan consolidation?

Repaying student loans after graduation can lead to financial hardship for many graduates. With the national student loan debt as high as $1.7 trillion, it’s no wonder the issue has gained such attention and become such a common concern among borrowers. One of the best ways to avoid financial struggle after graduation may be to learn how to consolidate student loans.

Why consolidate student loans? For one, dealing with several different lenders and bills can be problematic once repayment kicks in. Not only can juggling payments become complicated, but you also be paying way more in interest than you’d initially intended, and this can be devastating for your bottom line.

You have options when it comes to student debt consolidation. Here are a few choices you have.

Federal Direct Consolidation Loan

Typically, when borrowing money for college, you would have borrowed from the government or a private lender.  If you borrowed from the government, you may choose to pursue a Federal Direct Consolidation loan.

This type of loan applies only to students who have taken out federal loans. But it’s a solid solution, nonetheless. With a Federal Direct Consolidation Loan, you’ll consolidate all of your federal education loans into just one loan. Free of charge, this type of loan will rid you of dealing with multiple lenders each month.

To qualify, all you’ll need to do is complete your loan application and Promissory Note, then agree to the new loan terms through your Direct Consolidation Loan. After this, you’ll be responsible for just a single monthly payment. This is a great option for federal student loan borrowers hoping to simplify their monthly expenses and begin living a more stress-free financial life.

Why consolidate student loans through refinancing

Student loan refinancing is another good option if you are hoping to save money on your school loans. Whether you have federal loans or private student loans, or perhaps even a combination of the two, student loan refinancing is a wise choice for taking charge of your finances as you enter the workforce. And there are plenty of benefits to doing this, too. Here are a few student loan refinancing benefits.

Save money with a lower rate

Securing a lower interest rate on your loans is the number one way to save money, all else being equal. This is one of the many student loan consolidation benefits borrowers can take advantage of.

One of the easiest ways to secure a lower rate on your student loans is to refinance through a private lender. You may have agreed to less than stellar loan terms when you first signed on. This is all too common in borrowers facing a desperate financial situation that requires fast loan approval. But just because you agreed to a high interest rate once upon a time doesn’t mean you need to live with this forever. You can negotiate a lower rate once you make the choice to consolidate your loans. By lowering your interest rate and securing a lower monthly payment, you can use that extra money to put toward other debt or for discretionary spending.

Extend your term to lower monthly payments

Renegotiating your loan terms can save you money throughout the course of your loan. By extending your term, you’ll be able to make lower monthly payments and start saving money for the future.

Extending your loan terms and making lower monthly payments is particularly beneficial if you are currently living paycheck to paycheck and have little money for additional expenses. This is one of the many ways student loan consolidation benefits that can alter the course of your financial direction. 

Shorten your terms to pay off debt faster

While extending your loan terms can yield lower monthly payments, the opposite may also be useful. You can pay off your loan much faster by shortening your loan repayment terms. This will save you interest throughout the course of your loan, as well as get you that much closer to a student debt-free life. Whether to improve your credit score or simplify your financial life, learning how to consolidate student loans and ridding yourself of student debt sooner can have a great impact on your financial future.

The 2 Best Companies to Refinance Student Loans

Our Top-Rated Picks for 2024 Offer Low Rates and No Fees

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No Maximum Loan Amount

Fixed Rate

5.48% – 8.94% APR 4

Variable Rate

5.28% – 8.99% APR 4
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Precision Pricing — Pick Your Monthly Payment

Fixed Rate

5.19% – 9.74% APR 2

Variable Rate

5.72% – 9.74% APR 2

How to find the best student loan consolidation rates

Deciding to consolidate your student debt with student loan refinancing is a wise move for your financial health and one that can reap big rewards in the long run.

Once you decide to consolidate student loans through refinancing, you can begin shopping different lenders. And luckily, Purefy is here to make the process simple, convenient, and fast.

Use our Compare Rates tool to see your pre-qualified rates from our marketplace of top lenders — all in one place, all at once, and with no impact to your credit score. You’ll get a birds-eye view of what different lenders have to offer, and you can then make a sound decision about which terms will work best for your long-term financial goals.

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Today’s Rates Starting From 4.49% APR1

Take the guesswork out of shopping for a student loan refinance. Compare real prequalified offers from multiple top rated lenders in 2 minutes with no impact on your credit score.
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
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Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
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Purefy - Compare Private Student Loan Consolidation & Refinance Options Quickly & Easily
ascent student loans

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Ascent Rate Disclosure

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 12/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

ISL Rate Disclosure

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.44% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.97% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 10/13/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/11/2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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