Consolidating direct federal student loans
One way to consolidate your debt is to apply for a federal Direct Consolidation Loan.With this method, the Direct Consolidation Loan is used to pay off your old debts.This can make keeping track of your total debt, minimum payments, and monthly due dates confusing.Sometimes it might even cause you to miss payments.
If you have private debt and you’re offered a lower rate and better terms through refinancing with a reputable lender, that’s worth pursuing.
College students can take out new loans each year they’re in school, so by the time graduation comes, it’s common to have half a dozen, or more, individual loans.
Each of them may have different terms, including interest rates.
Borrowers sometimes use the terms “consolidate” and “refinance” interchangeably when talking about their federal loans. You can consolidate but not refinance your federal loans within the federal system—to refinance, you have to go to a private lender.
Consumer advocates caution that there’s a serious downside to moving to a private lender, even though you might get a slightly lower interest rate.