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  • Writer's pictureNathan Zarcaro

[2023] Student Loan Consolidation Calculator: Is It Better Than Refinancing?

Updated: Mar 29, 2023


Millions of Americans need help with their student loan debt, regardless of what happens with the pending forgiveness plan going before the Supreme Court. Even if it is allowed to continue, millions more will continue to need help.


For those with federal student loan debt, federal consolidation can be a great way to lower your payments without having to refinance their loans with a private lender.


But is student loan consolidation right for you? And is it better than refinancing? Use our student loan consolidation calculator to find out!



What is student loan consolidation?


Student loan consolidation is a federal repayment program that allows you to alter your repayment term in order to change your monthly payment amount. Those that qualify will see their qualifying loans replaced with a new consolidated loan.


Your new loan will come complete with a new term and interest rate, which will be calculated using the below criteria.



Consolidation loan term


Your new term will be established based on how much student loan debt you consolidate. At this time, the federal government has 6 different term options. They are

10, 12, 15, 20, 25, or 30 years, and these term options correspond with the following student debt balances:


  • Balances under $7,500: 10 years

  • $7,500 - $9,999: 12 years

  • $10,000 to $19,999: 15 years

  • $20,000 to $39,999: 20 years

  • $40,000 to $59,999: 25 years

  • $60,000+: 30 years



Consolidation loan interest rate


Your new consolidated loan will come with a new interest rate, which will be calculated by taking a weighted average of your existing loans and rates, but only for those loans that you are consolidating.


Then, this weighted average will be rounded (up or down) to the nearest 1/8th of a percent.


Here is an example.


For example, the average interest rate on your federal loans may be 5.57%, in which case your new rate will be rounded up to 5.625%.


Don't worry - our calculator will handle all of this for you automatically.



Our student loan consolidation calculator


We've built a student loan consolidation just for you to help you understand:


  1. How your monthly payments may change

  2. What your new loan term will be

  3. How much money you may be able to save per month


Plug your parameters into the calculator below.


Or download your very own version of the calculator here. You'll want to provide us with some basic information about your loans and your finances. To get started, we'll need:


  1. Your outstanding federal loan balance

  2. Your loan's interest rates

  3. Whether you've participated in an income-driven repayment plan before

  4. Your adjusted gross income

  5. Estimate of your future earnings

  6. Whether or not you plan to have children


Then, browse the various tabs of the calculator to see your projected payments across a number of strategies, including consolidation.


We'll provide you with your remaining balance, new interest rate, adjusted monthly payment, and your projected debt-free year.




Who should consolidate their student loans?


Student loan consolidation is best for those in a few types of financial positions:


  • Those looking to gain eligibility for an Income-Driven Repayment plan: Those with certain types of federal debt may gain access to income-driven repayment plans such as IBR, PAYE, and REPAYE.


  • Those looking lower their monthly payments without refinancing: Consolidation is one of the only ways you may be able to lower your monthly payments without needing to refinance with a private lender.


  • Those looking to simplify their loan repayment experience: Student loan borrowers oftentimes mention that one of the most burdensome parts of the borrowing experience is having multiple different loans, each with their own rate, term, and monthly payment. And since it is not uncommon for borrowers to have ten or more different federal loans, this means ten rates, terms, and payments to keep track of per month for ten years or longer.



Student loan consolidation tips


Here are a few more tips to help you decide whether consolidation is the right approach for you:


  • You don't have to consolidate all of your federal loans: If, for whatever reason, you don't want to consolidate each federal loan, you don't have to. You can consolidate a minimum of two loans, and a maximum of however many you have (that qualify for consolidation).


  • Pay attention to unpaid interest: When you consolidate, any unpaid interest that you have will be added directly to your outstanding principal. This is something that you'll need to pay close attention to, as it could add substantially to your monthly payments.



  • You'll lose any IDR program credit earned: If you're already on an income-driven repayment plan and have made any number of qualifying payments, you will lose credit for them should you decide to consolidate. Let's say you're pursuing Revised Pay as You Earn - REPAYE for short, and that you've already made 120 qualifying monthly payments towards forgiveness. Should you consolidate, you will lose the ten years of credit earned towards the program. The same is normally true for Public Service Loan Forgiveness as well, but there is currently a limited-time waiver in place.


Whatever you do, do not pay any company or loan consultant for help in consolidating your debt. It is an easy process that can be done on your own by completing form on the studentaid.gov website.



Student loan consolidation vs. refinancing


So far, you're probably wondering how consolidation and refinancing are different. After all, both processes lead to a new loan with a different term and different interest rate.


But this tends to be where the similarities stop. When you refinance, you'll receive a new loan, but with a private lender. So unlike consolidation, you'll actually no longer have federal student loans. Instead, you'll have private debt without any of the protections that federal loans carry.


This is a negative to refinancing, but there are a couple positives too.


For one, if you refinance, you'll be able to pick a term that works for you, rather than getting stuck with a term based on the amount of debt you have remaining.


And secondly, you'll have this same flexibility to be able to pick a rate that works best for you.


It really comes down to whether you're comfortable with private student loan debt or not.



Is consolidation better than refinancing?


In my opinion, there is room for both consolidation and refinancing, depending on the situation. Consolidation tends to work better for those that:


  • Already have low interest rates

  • Are looking to gain access to income-driven repayment

  • Want to simplify their repayment

  • Want to maintain federal student loans


On the contrary, refinancing with a private lender works best for those that:


  • Want lower interest rates

  • Desire picking their own term that works best

  • Are okay with having private debt



Frequently asked questions


We know you have questions, and we have answers. Here are some of the most popular student loan consolidations out there.



1. Will consolidation gain me eligibility for forgiveness?


It depends. It is true that some with certain types of federal loans may gain eligibility for certain income-driven repayment plans as a result of their Direct Consolidation Loan. For example, Federal Perkins Loans are not eligible for income-based repayment unless consolidated first.


For a full view on these intricacies, please visit our IDR and PSLF specific pages below:


  • Income-Based Repayment

  • Pay as You Earn

  • Revised Pay as You Earn

  • Public Service Loan Forgiveness



2. Which loan types are eligible for consolidation?


At this time, the following types of federal student loans are eligible for consolidation via a Direct Consolidation Loan:


1. Subsidized Federal Stafford

2. Unsubsidized and Nonsubsidized Federal Stafford

3. PLUS loans from the Federal Family Education Loan (FFEL) Program

4. Supplemental Loans for Students

5. Federal Perkins

6. Nursing Student

7. Nurse Faculty

8. Health Education Assistance

9. Health Professions Student

10. Loans for Disadvantaged Students



3. Why does consolidation increase your interest rate?


The student loan consolidation process increases your interest rate due to the rules regarding Direct Consolidation Loans. In essence, your qualifying federal loans will be summed, and your new interest rate will be the weighted average of your old rates, rounded up to the nearest 1/8th of a percent.


For instance, if the weighted average of your existing interest rates equals 5.56%, your new interest rate will be 5 5/8%, equal to 5.625%. For most borrowers, this 1/8th of a percent will only impact your payment by a few dollars.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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