Student Loan Resources

How to Consolidate Student Loans

Student loan debt is extremely common. About 70 percent of college graduates leave school with a significant amount of student loans. In fact, currently in America, over 44 million people have student loans totaling over $1.5 trillion dollars.

This would be staggering enough and difficult to deal with if a student only had one loan to deal with. However, most students have between 8 and 14 individual loans with multiple loan servicers or companies. This means that they have multiple payments and multiple due dates, which can be difficult to budget for and manage effectively.

Student loan consolidation is a great option for college graduates who need to get a handle on their student loan debt. By consolidating your loans, you can obtain more time to pay, get a lower payment, and have only one payment to make each month. Of course, if you get more time to pay you will pay more in interest over time, but this can make it much easier to handle making your loan payments on time.

If you do not make your student loan payments on time, it can greatly affect your life. Federal student loans can go into default causing liens to be placed on your tax refunds and other assets. Student loans can also ruin your credit if not handled appropriately because they add up to such a large amount of debt.

When you consolidate student loans, it makes it much easier to maintain a good payment history. When you consolidate, you end up with just one loan payment. Essentially, you are getting a new loan that pays off all of your other loans. This improves your credit rating and helps you stay on track for repayment over time.

Just like you migh consolidate your credit cards with one of the best balance transfer credit cards so that you can eventually get some of the best credit cards for travel miles, there are a number of options for how to consolidate student loans. The options available to you really depend on the types of student loans that you have. You might have federal or private student loans or a mix of them. If you have only federal student loans, your options are more limited.

The Best Student Loan Consolidation for Federal Student Loans

If you have only federal student loans, you only have one option for consolidation. The Direct Loan Consolidation program through the Department of Education allows you to consolidate all of your federal student loans into one loan with renegotiated payment terms and one low monthly payment. In this way, you will be able to have just one loan payment rather than many.

It is important to keep in mind that you can only consolidate your federal student loans one time. If interest rates become lower over time, you will not be able to reconsolidate for a lower interest rate. The interest rates for federal loans are fixed, and they are determined at the beginning of each year. However, they are the lowest fixed rates available at the time, so this is frequently not as much of a concern.

When you consolidate your federal student loans, you will be given new repayment terms. The maximum amount of time you have to pay off your student loans depends on the number of loans that you have.

Up to $7,500 10 years

Up to $9,999 12 years

Up to $19,999 15 years

Up to $39,999 20 years

Up to $59,999 25 years

Over $60,000 30 years

You can also opt to pay your federal consolidation loan based on an income contingent repayment plan. There are several income-based options available depending on qualifying factors. If you didn’t finish school with a degree or you are unable to get a high paying job right out of college, consolidating and getting on an income-based repayment plan can greatly assist you in being able to keep your loan payments current and keeping your credit in good standing.

Because you can only get a federal student loan consolidation one time, you want to make sure that you include all of the loans you have. If you are unsure who your loan servicers are and what student loans you have in total, you can gather this information by contacting the Department of Education. When you consolidate you will sometimes have the option of choosing your loan servicer for the consolidation loan.

Never pay a fee for consolidating federal student loans. You can take advantage of this entirely free process through the federal student aid website. The application process takes about 30 minutes to complete. Make sure that if your loans are not in forbearance or a grace period that you continue making payments until you are notified that your loans have been consolidated. If loans go into default before the consolidation is final, you may not qualify for the consolidation.

Three Best Private Student Loan Consolidation Companies Overall

If you have private student loans or a mixture of private and federal loans, you might want to look into student loan refinancing with a private lender. These lenders can consolidate your student loans from other private lenders so that you have just one lender and one payment.


SoFi is the largest private student loan servicer in the country. They focus primarily on graduates with high student loan debt, high income, and good credit. However, their customer service and additional available services cannot be beaten. They also offer competitive interest rates.

  • 5 to 20-year repayment terms
  • Variable or fixed interest rates available ranging from 2.470% to 8.179% based on qualifiers
  • 0.225% interest rate discount for auto pay
  • Deferment or forbearance available for disabled, students returning to school, or active military
  • Minimum credit score 650 FICO
  • A+ Better Business Bureau rating
  • Refinance both federal and private loans into one easy to manage loan
  • Certain bar and residency loans not eligible
  • Career coaching, wealth advice, and entrepreneurship programs available


LendKey is not an actual lender, but rather a marketplace for student loan refinancing. If you want to keep your student loans with a local lender, this is a good place to start. With one application you will receive offers from local banks and credit unions for student loan refinancing.

  • Variable repayment terms available depending on the selected lender
  • Variable or fixed interest rates available starting at 2.47%
  • Undergraduate and graduate loans are eligible for refinancing
  • Refinance both federal and private loans in one easy to manage loan
  • A+ Better Business Bureau rating
  • Minimum income to be eligible $24,000 annually


Earnest is a subsidiary of Navient, a federal student loan servicer. They offer student loan refinancing for both federal and private student loans. They are very competitive in the marketplace, but it can be difficult to qualify for student loan consolidation through this company if you don’t have good credit.

  • 5 to 20-year repayment terms
  • Variable or fixed interest rates ranging from 2.57% to 6.32% APR
  • Discounted interest rate for auto pay enrollment
  • Deferment or forbearance options available for certain situations
  • Ability to tailor loan terms to lower monthly payments at any time
  • Minimum credit score 650 FICO
  • Minimum income to qualify $35,000 annually
  • Must have completed degrees for all loans refinanced
  • A+ Better Business Bureau rating

Bottom Line

If you have a mix of federal and private student loans and can qualify, these are the three most popular private student loan refinance companies available. Whether you have high or low income or good or just okay credit, one of these three private student loan lenders will be able to work with you.

How to Select a Private Student Loan Refinancer

There are many things to consider when selecting a private student loan consolidation refinancer or lender. While you can refinance your student loans multiple times through private lenders, it is best to refinance just one time and stick with a lender for the long haul. Do your research and get approvals from multiple lenders, comparing terms, before making a final decision.

Student Loan Refinancing Basics

There are some basic things that you will need to consider before refinancing your student loans. These factors will vary depending on the lender that you choose to use for your student loan consolidation.

  • With some lenders, if you use a cosigner on the refinance, the cosigner may be responsible for the loan for the entire term of the loan. A few lenders allow the cosigner to drop off after a period of on-time payments.
  • You will be responsible for making your current student loan payments until such time as you are notified that your student loans have been paid off by the refinancing lender.
  • When you refinance federal student loans through a private lender, they no longer qualify for federal programs, such as student loan forgiveness or income contingent repayment plans.
  • Many private lenders do not have forbearance or deferment options available, or these options may be severely limited. Be sure that you will be able to stick to your repayment terms before refinancing.
  • In most cases, you should wait to consolidate your student loans or refinance them until you have graduated and completed your degree program, even if you are attending graduate school. Most private lenders require that you have a completed degree before refinancing.
  • It takes 270 days of delinquency to default on federal student loans, but many private lenders default after just one missed payment.

Narrow Your Choices by Contemplating These Questions

There are certain questions you should ask of yourself and the potential lenders before making a decision about a private student loan refinance. The answers to these questions will determine which companies will work with you and which ones will give you the better terms.

  • What is your credit score? What minimum credit score does the private lender require? Some of the student loan refinancers require fairly good credit (a score of at least 650) to qualify. Other lenders are more flexible, but you still generally have to have a score of at least 600. A few lenders may look more at your income and other financial health if you don’t have much credit history.
  • What is your income? Private lenders have a minimum income guideline that you must meet to qualify for student loan refinancing. For some lenders, this is fairly modest at around $24,000 per year. But for other lenders, the income guidelines can be quite exclusive.
  • Do your parents have PLUS loans that they want out of their name? Some private lenders allow Parent PLUS loans to be refinanced with student loans under the student’s name, but not all.
  • Do you have a cosigner? If you don’t have any credit history beyond your student loans, you may need a cosigner for your private student loan consolidation. If you do need a cosigner and have one lined up, check with the lender to see at what point the cosigner can be dropped off of the loan, if at all.
  • Are you going into a career that qualifies for Federal Student Loan Forgiveness? If so, you only want to refinance your private loans through a private lender. You lose this benefit if you take your federal loans out of federal hands.
  • What are the chances you will continue your education for a higher degree? You may want to wait to refinance your student loans until you are completely done with school.
  • What are the chances you will be unable to make a payment due to unemployment, disability, or other loss of income? Check with the private student loan refinance lenders to see what deferment or forbearance options are available if any.

Bottom Line:

Private student loans can be refinanced multiple times, but each time you refinance you run the risk of hurting your credit or paying more interest. It is better to make a wise and well-informed decision the first time and refinance only once. Shopping around for the best rates you can get with your income and credit history is of the utmost importance.

Best Private Student Loan Consolidation for Low Income

Unfortunately, many college graduates find that they are not able to get high paying jobs right out of college. If you are unable to get a job in your chosen career field, or if you find yourself starting at the very bottom of the ladder, you may find it difficult to qualify for many private student loan refinancing. Luckily, there are a few lenders willing to work with graduates with a lower income.


LendKey lenders only require a minimum income of $24,000 per year. To put that in perspective, that is just $11.53 per hour. This makes them a good resource for graduates who are starting out as interns or in lower paying positions trying to break into a new career field.


LendEdu is similar to LendKey, in that it is a marketplace for multiple lenders. The qualifications of the lenders vary greatly, but here you will find many lenders willing to work with you if you have lower income. You will have to provide proof of some type of income or employment, however.

  • Variable and fixed interest rates available starting at 2.43% APR
  • 5 to 20-year repayment terms
  • Deferment and forbearance options available in certain situations

Laurel Road Loan

Laurel Road offers unique repayment options for those graduates employed as interns or residents. You can opt to pay just $100 per month while doing your internship or residency, with the interest not being capitalized during this time. You can then move to full repayment options once your internship or residency is completed and you are in full-time regular employment.

  • 5 to 20-year repayment terms
  • Variable or fixed interest rates available ranging from 2.95% to 7.02% APR
  • Deferment and forbearance options available in certain qualifying situations

Bottom Line:

When you have a lower income due to being a recent graduate, finding private student loan refinancing can be difficult. But, if you have decent credit and check with these lenders, you may still be able to refinance your student loans and get a lower monthly payment. Laurel Road is the most recommended for interns and residents, as their programs are designed with these individuals in mind.

Best Private Student Loan Refinancing for Limited Credit History

Many new graduates may not have any credit items on their credit report other than their student loans. As such, you may not have the credit history or credit score necessary to refinance and consolidate your student loans. These companies will work with you if you have the required proof of income and employment and have graduated from your degree program.


Earnest requires a credit score of 650 or higher, but they will refinance your student loans if you don’t have a lengthy credit history. You simply need to show that you are financially fit, meeting their income requirements and having nothing negative on your credit report. If you have student loans and have kept them in good standing, you should be able to qualify for a student loan refinance from Earnest.

Education Loan Finance

ELFI has a great program for refinancing student loans. They look less at your credit history and more at your ability to repay the loans. You will have to meet their minimum income guidelines and show that you have sufficient debt to income ratio to show that you can make all of your payments and repay the refinance loan.

  • 5 to 20-year repayment terms
  • Fixed or variable interest rates available ranging from 2.55% to 6.69% APR
  • No forbearance programs
  • Must hold a bachelor’s degree or higher from a qualifying school
  • C+ Better Business Bureau rating

Bottom Line

Having little to no credit history beyond your student loans doesn’t have to stop you from getting your student loans consolidated or refinanced. You may be able to find additional lenders willing to work with you through matching services like Credible and LendKey.

Best Private Student Loan Refinancing with a Cosigner

Many lenders will require brand new graduates to have a cosigner when refinancing student loans through a private lender. This is due to the fact that most new graduates don’t have much credit history beyond their student loans, which they will not have been paying on during school. While most lenders allow for or may even require a cosigner, some lenders are better to work with than others.


CommonBond is one of the few lenders that will allow your cosigner to drop off of your loan after certain requirements are met. Basically, once you have graduated and are no longer in school for any degree program, are age 21, have made at least 24 monthly on-time payments, and pass the credit check, you can have your cosigner removed from your loan.

  • 5 to 20-year repayment terms
  • Fixed, variable and hybrid interest rates available starting at 2.48% APR
  • Deferment and forbearance options available under certain qualifying circumstances
  • Must have a degree from a qualifying school
  • B+ rating from the Better Business Bureau

Citizens Bank

Citizens Bank is another private student loan refinancing lender that allows the cosigner to drop off once qualifications have been met. You must make 36 on-time monthly payments to get your cosigner released from the remainder of the loan term.

  • 5 to 20-year repayment terms
  • Variable or fixed interest rates available starting at 2.79% APR
  • 0.25% interest rate discount for enrolling in auto pay
  • Minimum loan to refinance $10,000

Bottom Line

You don’t have to have perfect credit or keep your parents on the hook for your student loans forever. While many lenders want to keep the cosigner for the entire term of the loan, or don’t allow one at all, these lenders will offer to drop the cosigner after conditions have been met. This often makes parents, siblings, and others you may ask to cosign more comfortable with being on the loan with you.

Best Private Student Loan Refinancing Interest Rates for Upper Graduates

If you have excellent credit, a good income of around $60,000 per year, and have a graduate degree, you can get some very good interest rates on private student loan refinancing. These lowest interest rates and loan programs are generally secured for those with graduate degrees, such as nurses, doctors, dentists, and lawyers.


SoFi offers very low-interest rates starting at just 2.470% APR for variable interest rates. Even if you decide to go with a fixed interest rate you can get as low as 3.899% APR. Their requirements and qualifications are much stricter than other lenders, however. You must have a credit score of at least 650 and meet debt to income ratio requirements.

Laurel Road

Laurel Road has interest rates starting at just 2.95% APR for variable interest and 3.50% APR for fixed interest rates. Again, their credit and income guidelines are strict, and they typically work with upper-level graduates, interns, and residents. In fact, they have repayment plans available specifically for medical interns and residents.

Bottom Line:

If you have a good credit history and high income resulting from a graduate degree, you are most likely to get the best interest rates. These lenders pride themselves on working primarily with students with graduate degrees and have programs available for those professionals. Laurel Road has options for interns and residents, while SoFi offers career planning and entrepreneurship consulting to their borrowers.

What Should You Do to Qualify for Private Student Loan Consolidation?

While lenders do vary in their qualifiers for obtaining a student loan refinance, there are some qualifications that are fairly universal. Making sure you meet all the requirements before applying will save you a lot of time and effort. It will also help you to know in advance if you need a cosigner, and if your cosigner will qualify.

Among the requirements for student loan consolidation, you typically need to:

  • Show proof of income, at least $24,000 to $60,000 per year depending on the lender.
  • Show proof of graduation from a four-year degree program or graduate degree program
  • You must have attended a Title IV school, which means a school that qualifies for federal student aid. This is not to say that lenders will approve refinance of all loans from a Title IV school. Some lenders have further requirements that the school cannot have been a for-profit university, which eliminates many online colleges.
  • You must have a credit score of at least 600 FICO, while some lenders require a score as high as 680 to 700.
  • You must be 21 years of age for many lenders to refinance your student loans without a cosigner.

How to Apply for Private Student Loan Consolidation

Before applying for private student loan consolidation, you will need to do some information gathering. You will need to know exactly who holds every one of your student loans and the balance of each loan. You’ll also need a total amount of your student loan debt. You may need to contact your lenders to learn more about what amounts to pay off.

Other information you will need to gather will be your paystub, your date of graduation and GPA, and proof of citizenship, such as government issued ID. Once you have all of these items, you are ready to apply. Most lenders have an online application and pre-approval process that takes only a few minutes to complete.

Go to the lender’s website and fill out the required information. Within a few minutes, you will have a decision as to whether or not you qualify for refinancing. If you do qualify, you will be notified of the next steps, which will likely involve sending proof of the information you provided to the lender.

3 Tips for Completing the Application

  1. Don’t lie. Make sure that all of the information you provide is completely true and factual, and that you have documentation to back up your claims.
  2. Check with your existing banks and lenders first to see if they can refinance your student loans for you. Since you already have a relationship with them, qualifying and the application process could be quite painless and more valuable.
  3. Make notes of the application process for each lender you apply with. Make notes such as what interest rate you were offered, what information you had to provide, and questions you had to answer and the answers you provided. If the lender requests an interview or further information you may need to refer to these notes.

Bottom Line:

You really need to be fully prepared before applying for student loan consolidation or refinancing. This is not something you should do on a whim. Make sure you have all of your ducks in a row and all of the required information and documentation before you begin. Go through the process carefully and make sure that you are fully aware of all the terms and conditions before agreeing to a new loan.

Best Private Student Loan Consolidation 2018 Summary

There is no one private student loan refinancing lender that is the best for everyone. It really depends on your personal financial and degree situation.

  • Best Private Student Loan Refinancing for Low Income: LendKey
  • Best Private Student Loan Refinancing with a Cosigner: CommonBond
  • Best Private Student Loan Refinancing for Upper Graduates: SoFi
  • Best Private Student Loan Refinancing for Medical Interns and Residents: Laurel Road
  • Best Private Student Loan Refinancing for Limited Credit History: Education Loan Finance (ELFI)

Final Thoughts

Having a lot of student loans when you graduate can be overwhelming. Not only might you be paying a lot in interest, but the multiple loans with multiple repayment terms could add up to a massive amount of your income being dedicated each month to simply paying off your loans. Student loan consolidation and refinancing can greatly reduce your monthly burden, even if it costs you more in the long run with interest payments.

Still, student loan refinancing is not something to rush into. Make sure that you have evaluated all of your options and made an informed decision on a lender. If you have a mix of federal and private student loans, carefully consider your decision before refinancing federal loans with a private lender. Remember that once federal loans are in private hands, you have lost all of the perks and programs that are available through the federal student loan program.

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