If your financial situation has improved since you took out the loan, you could see a lower interest rate which will likely save you money in interest over the life of the loan.
By combining federal student loans, the borrower can simplify the bill each month and lower monthly payments by choosing a longer repayment period of up to 30 years.
While this seems beneficial, it is actually a double-edged sword when it comes to interest.
If you don’t think you will need any financial hardship help in the future, such as deferment and forbearance options, then refinancing and consolidating with a private lender might be a good option.
The federal government offers support to those with financial hardship, but many private lenders do not.
In short, the borrower can benefit from a reduced interest rate, which will lead to them paying less over the life of the loan.
Alternatively, some may choose to extend their repayment term, which lowers monthly payments but also may mean paying more over the life of the loan unless you receive a lower interest rate, in which case you may pay more or less over the life of the loan depending on the new rate and repayment term.
Applications for federal student loan consolidation can be made through the government website, Student
While federal student loans can only be consolidated with other federal student loans with the government, you can consolidate private and federal student loans into a new private student loan.
This means if you refinance federal student loans they will become a new private student loan.