Can I Consolidate Federal & Private Student Loans Together?

If you have student loans, chances are you're dealing with multiple interest rates, multiple loan servicers and multiple monthly payments – a surefire recipe for multiple headaches. The idea of consolidating all your loans together sounds like a great way to simplify, but is that even possible when you have both private and federal loans? More importantly, is it advisable? The short answer to the first question is yes, it is possible. But in order to decide whether it makes sense for your situation, there are some considerations to take into account. Here's what you need to know: The Term "Consolidation" Can Have Different Meanings Consolidating student loans simply means combining them together, but there's a difference between consolidating through the government's Direct Loan Consolidation Program and consolidating through a bank or alternative lender. When you consolidate student loans through the Direct Loan Consolidation Program: •Most (but not all) federal loans are eligible, and private loans are not allowed. •The resulting interest rate is a weighted average of the original loans' interest rates, which means no money is saved. •You may be able to select a new, longer term, which can reduce your monthly payments; however, a longer term can also end up costing you more money in total interest. When you consolidate student loans through a private lender: •In most cases, only private loans are eligible (although a handful of lenders accept both private and federal student loans). •You're offered a new interest rate based on your current financial situation, including your credit score (which means those loans are being refinanced as well as being consolidated). •If you qualify for a lower interest rate, you may be able to reduce your monthly payments or shorten payment term, and you can save a significant amount of money on total interest. Okay, so we've established that certain lenders will allow you to consolidate your private and federal loans together. Now let's talk about whether that option is right for you.