Pixabay user Brett_Hondow
You’ll see these two words a lot when researching student loan options. After exhausting scholarship, grant, and work study opportunities, many students and families turn to student loans in order to pay for a higher education. (And a quick reminder, you should always check out federal loan options before even considering looking at private loans).
Consolidating Student Loans
If you take out multiple loans, you’ll have to juggle multiple repayment plans, interest rates, and due dates. It can be tricky to keep all of them organized. Consolidating essentially means taking multiple loans and turning them into one. One payment, one interest rate, one due date. It can alter (and even lower) your interest rate and potentially save you money—however it’s important to do plenty of research before committing, so you understand your options and how your payments will change.
Refinancing Student Loans
When you take out a loan, you agree to certain rules for repayment. This can include things like how much you repay each month, the interest rate, etc. Refinancing your loan is essentially swapping out one plan with another. You can switch to a plan that works better for you, or if you’ve experienced recent financial changes. It should be noted that you can only refinance private student loans, not federal ones. Refinancing can have you jump through quite a few hoops, so make certain you want too/need to refinance before doing so.
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