Millions of Americans have thousands of dollars in student loan debt. This significant debt can make it difficult to build a savings or emergency fund and for many, there is no money left over after paying for necessities and other expenses each month. If you are struggling to stay current on your student loan payments, or you are finding it difficult to manage the multiple monthly payments, then you may want to consider consolidating your federal and private student loans.

Consolidating your student loans does have significant benefits, but it has some disadvantages that should be considered as well. Based on your specific financial situation, you will need to weigh the pros and cons to make the best decision.

Federal Student Loans

PenFed offers federal and private student loan consolidation through a loan refinancing option. You can combine your loans into a completely new loan with a new, lower (hopefully) annual percentage rate (APR). PendFed offers loans with fixed or variable rates. A fixed rate will remain the same throughout the duration of the loan, and a variable rate will fluctuate. At times it may be lower than the fixed rate and at times it may be higher.

The APR for a fixed rate loan through PenFed ranges between 3.5% and 7.28%, and the variable rate is between 2.8% and 6.58%. The APR will also vary depending on the loan term, the type or level of degree obtained with the student loans, and if you have a co-signer. Variable rate loans cannot exceed 9.0% for up to an 8-year loan term, or 10.0% for up to a15-year term. The maximum loan term is 15 years. The minimum variable rate is 2.0%.

Benefits of Refinancing

Refinancing your federal and private student loans with PenFed will allow you to reduce the interest rate of your loans, simplify your monthly payments and reduce your monthly payment amounts. Although the loan term is extended in most cases, if you get a significantly lower interest rate on your refinancing loan, you can end up saving money in interest charges over the duration of the loan term.

Applying for student loan refinancing is easy, and the application can be completed online. While this is extremely convenient, you should take the time to compare a few consolidation options from different lenders. Comparing options will allow you to select the best deal for your specific student loan debt situation.