Reducing Your Student Loan Balance: Additional Options

You may be able to take advantage of one or more of the above programs, but they may not be relevant to you. Regardless, there are additional options for reducing or eliminating your loan balance.

STUDENT LOAN CONSOLIDATION

Merge of all your federal loans into one single monthly payment.

Your monthly payment isn’t reduced by consolidation and your interest rate is the average of all your loans put together, so it doesn’t typically save you any money. Also, consolidation includes only federal loans. If you obtained one federal loan and one private loan to bridge the gap, you won’t be able to consolidate the two loans.

However, for borrowers with multiple federal loans, student loan consolidation is a great way to reduce the number of payments of which you need to keep track.

‍STUDENT LOAN REFINANCING

Student loan refinancing allows you to merge federal and private student loans into a new private loan with one lender and one single monthly payment.

Unlike consolidation, refinancing also allows you to obtain a far lower interest rate than you had previously, potentially making a big difference in how long it takes to pay off your loan. And, as we mentioned earlier, even if you've already refinanced your student loan once before, you can do it again to further lower your interest rate and, in some cases, your monthly payment.

Student loan refinancing is beyond the scope of this guide; however, you can access a step-by-step process on how to refinance to get rid of your student loan debt here.

‍RECAP: ADDITIONAL OPTIONS FOR LOAN BALANCE REDUCTION

Student loan consolidation is a useful way to combine federal student loans into one convenient monthly payment.
Student loan refinancing combines both federal and private student loans into one monthly payment at a reduced interest rate.