You may be able to save money and lower your monthly payment by refinancing your student loans with an interest rate reduction.However, when you refinance federal loans, they’ll become private loans and will no longer be eligible for federal programs, including income-driven repayment plans and forgiveness programs.
You have the option of listing loans that you don’t want to consolidate but that you want factored into your total loan balance. You can choose among Great Lakes Higher Education Corporation & Affiliates, Navient, Nelnet or Fed Loan Servicing.
Your total loan balance will impact your Direct Consolidation Loan’s repayment period and monthly payment. If you plan to use the Public Service Loan Forgiveness program, you have to choose Fed Loan Servicing, as it manages the program. When you consolidate your loans, you may be able to choose the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan or Income-Contingent Repayment Plan.
By contrast, federal loan consolidation won’t change how much interest accrues, and eligibility doesn’t depend on your creditworthiness. You can consolidate your federal student loans and refinance your private loans, or consolidate some of your federal loans and refinance others.
Or, you may research your options and determine you shouldn’t use either.
Dealing with long-term debt can be difficult, but having a strategy and tools can help.