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When student loan debt becomes unmanageable, there are ways to lower your payments. Consolidation can help if you have multiple loans with individual interest accruing, and refinancing is an option for a single loan or loans that have already been consolidated.

Student Loan Consolidation

This process combines all existing loan accounts into one single loan. If you have multiple loans from different educational institutions or had a different lender service loans throughout your education, this option gives you one monthly payment and a low interest rate on the entire combined balance.

Federal Student Loan Consolidation

If you only have federal loans, you can use federal refinancing. The federal interest rates are often lower than the interest rates of traditional private lenders. You can easily apply for federal student loan consolidation online at StudentLoans.gov.

There are options for parents, undergraduate students and graduate students. Interest rates are rounded up by a fraction. However, there are programs that base payments on income rather than the loan balance or term. If you want to refinance federal loans, always work through the government’s site. There are companies offering to help you apply for a fee. It is free to apply directly through the government, and the application process is easy enough that assistance is unnecessary.

Private Student Loan Consolidation

For students with private loans, this is an option. You may have taken out private loans on top of federal ones to cover your living expenses during college. If you find yourself paying too much, some lenders offer private consolidation loans starting as low as 2.09 percent interest. Keep in mind that interest is based on credit scores and history. There are loan fees, and the terms and maximum amounts vary based on different lenders. These are the top six banks offering private consolidation loans for lower interest rates:

  • SoFi
  • Earnest
  • DRB
  • LendKey
  • Citizens Bank
  • Common Bond

Student Loan Refinancing

If you previously consolidated loans or only have one account open, refinancing may make your monthly payments more affordable. There is no federal program for refinancing. Private lenders can help you refinance private and federal loans or a combination of both. You will not qualify for income-based payments with refinancing.

The lenders listed in the previous section are all good choices for refinancing. Also, Credible and College Ave Student Loans offer low interest rates. You can apply with any of these companies online and usually receive a decision within a day or two. When you plan to apply with more than one lender, do so at the same time. If you apply with several lenders and wait to accept a loan, they may request your credit data again. Your score often decreases temporarily with multiple inquiries, which could negatively affect their approval decision or your interest rate.

Avoiding Student Loan Default

If refinancing or consolidating your student loans will not help, there are still some steps to take. Private lenders are not as flexible as the government with repayment options. Here are a few possible alternatives if you have little to no income:

  • Grace period extension
  • Deferment
  • Income-based payments
  • Federal alternative plans

For federal alternative options, amounts may be based on alternative payments, terms or negative amortization. If you cannot afford your monthly payment, contact your lender immediately. Falling behind on payments means bigger fees and more interest, and you should never risk defaulting. Lenders are willing to work with you.