Consolidating and Refinancing Your Student Loans

Consolidating and refinancing my student loans benefitted me greatly.
You know that feeling when you’re trying to move forward with your life, but you truly can’t afford anything without going further into debt and don’t feel financially secure enough for what’s next? That was my feeling.
I didn’t know where to start so I began by cleaning up house aka my finances.

Consolidating

When consolidating, you take the messy pile of papers that is your loans and put them into fewer, neater stacks.

 

The chaos on my figurative desk consisted of heaps of student loans from Fedloan, Sallie Mae, Wells Fargo, and Heartland ECSI (a private loan with my university). I was such a crappy bookkeeper of my own finances that I can’t even tell you how many loans I had or the interest rate for each loan.

 

What not to consolidate

Do not consolidate federal loans with private loans, only consolidate federal loans with other federal loans. Two reasons: 1) Federal loan interest rates are lower than private loan interest rates and 2) you lose the ability to qualify for government loan programs such as the Public Service Loan Forgiveness Program or Income-Driven Repayment Plans.
If I were to consolidate my federal with Wells Fargo loans, instead of repaying Fedloans with a 5.25% interest, I would be paying them at 6.5% variable interest with Wells Fargo.
Note that you can only consolidate federal loans once. You can apply for Federal student loan consolidation at studentloans.gov.

Decrease the number of loans

My initial goal with consolidating was to reduce the number of student loans. It was overwhelming for me to see 10+ FedLoans, multiple Sallie Mae loans (I say multiple because I don’t remember how many!), 8 Wells Fargo loans, and 1 Heartland ECSI loan.
The 10+ FedLoans were consolidated into one federal subsidized account and one federal unsubsidized account.
The Sallie Mae and Wells Fargo student loans were consolidated into two, large Wells Fargo student loan accounts. I was unable to consolidate my WFB loan from two loans into one because of the total: ~$150,000. The two Wells Fargo loans could only be consolidated if the total is less than $120,000.
The Heartland ECSI loan, a direct loan with my university, wasn’t consolidated into Wells Fargo because this loan had no interest and had a fixed rate of $83.33 per month.
Instead of having 4 lenders with 19+ accounts, I consolidated into having 3 lenders with 5 accounts.
A reason not to consolidate would be if you are using the debt snowball method. Having a greater number of loans with smaller totals may help you feel like you’re knocking your debt out sooner. Read about the debt snowball vs. the debt avalanche here.

Possibly decrease the interest rates

The new interest rate for a consolidated loan is the average of the previous loan interest rates. Fedloans offered a 0.25% discount on interest I set up automatic payments. Since I’ve been banking with Wells Fargo since 2006 I was able to receive a 0.25% discount on interest.
I chose to stick with a variable interest rate since my offer was lower than a fixed rate. My variable interest rates are still a headache. Read about why I’m mad about it here.
The only surefire way to decrease interest rates is to refinance while having a good credit score. Honestly I don’t remember what my credit score was at the time.

Refinancing

When you refinance your loans you change the terms of your repayment plan. You can apply for a lower interest rate and extend the repayment term. The interest rate is dependent on your credit score or, if you don’t have good credit, the credit score of your cosigner. Read more about refinancing here.
You can’t refinance federal student loans unless you consolidate them into a private loan.
When I refinanced my Sallie Mae and Wells Fargo loans my payoff date was extended to 2033. I don’t intend on keeping this debt until then that’s for sure!
I don’t remember what my interest rates were before, but my total monthly payment was $1536.15 then decreased to ~$1450.

Get organized and get out

As you can see before I consolidated and refinanced my loans I was terrible at managing my finances. Doing this helped out a ton! I was able to clean up house, reevaluate the status of my debt, and come up with a better escape plan. Read about my plan to get out of debt here.
Reach out to your bank or other private lenders to see if consolidating and refinancing will help you out.
1

You might also like

Comments (40)

  • magnificent put up, very informative. I’m wondering
    why the other experts of this sector don’t notice this.
    You must proceed your writing. I am confident, you have a huge readers’ base already!

    nursemillennial 4 months ago Reply

    Thank you for the encouragement and also for taking the time to stop by!

  • yourmoneywise.in 9 months ago Reply

    What i do not understood is actually how you are not really much more well-preferred than you might
    be now. You’re so intelligent. You know therefore considerably on the subject
    of this subject, made me in my view believe it from
    numerous varied angles. Its like women and men aren’t interested unless it is something to do with Lady gaga!
    Your own stuffs excellent. At all times take care of it up!

    nursemillennial 4 months ago Reply

    Thank you very much! I’m glad I can offer a different perspective, although I do love Lady Gaga!

  • Paul Swanagan 6 months ago Reply

    Howdy! Do you use Twitter? I’d like to follow you if that would be okay. I’m definitely enjoying your blog and look forward to new updates.

    nursemillennial 4 months ago Reply

    Hello! I do post my articles to twitter, however I am not active. The most recent updates will be right here on the blog. Thank you so much!

  • Great post. I am going through a few of these issues as
    well..

    nursemillennial 4 months ago Reply

    Thank you! I’m glad we can relate.

  • www.damoitxueyuan.com 4 months ago Reply

    great submit, very informative. I wonder why the
    opposite specialists of this sector don’t notice this. You should proceed
    your writing. I’m confident, you’ve a huge readers’ base
    already!

    nursemillennial 4 months ago Reply

    I’ve yet to reach out to more people who can relate. Thank you for your encouraging words! I will definitely continue writing.

  • Strange Clouds 4 months ago Reply

    I’m impressed, I have to admit. Seldom do I come across a blog that’s both
    equally educative and interesting, and without a doubt, you have hit the nail on the head.
    The problem is an issue that too few folks are
    speaking intelligently about. I’m very happy I stumbled across this in my search for something regarding
    this.

    nursemillennial 4 months ago Reply

    Thank you so much! I appreciate you stopping by and giving feedback.

  • Otis 4 months ago Reply

    Terrific article! This is the kind of info that are supposed to be shared around the net.
    Shame on Google for not positioning this post higher!

    Come on over and consult with my web site . Thank you =)

    nursemillennial 4 months ago Reply

    Thank you for this! I’m hoping to rank higher in Google one day!

  • It’s an remarkable piece of writing in support of all the web visitors; they will obtain advantage
    from it I am sure.

    nursemillennial 3 months ago Reply

    Thank you for your feedback!

  • Cute Hedgehog 3 months ago Reply

    Very good info. Lucky me I ran across your blog by chance (stumbleupon).
    I have saved it for later!

    nursemillennial 3 months ago Reply

    I’m glad you found the blog! Thank you for stopping by, come back soon!

  • If some one needs expert view about running a blog then i advise him/her to pay a
    visit this weblog, Keep up the good work.

    nursemillennial 3 months ago Reply

    I appreciate your feedback! Thank you for stopping by, come back soon!

  • information online 2 months ago Reply

    *I was very pleased to find this web-site.I wanted to thanks for your time for this wonderful read!! I definitely enjoying every little bit of it and I have you bookmarked to check out new stuff you blog post.

    nursemillennial 2 months ago Reply

    Thank you for your feedback! Come back soon!

  • try this 2 months ago Reply

    Wow, fantastic blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your site is magnificent, as well as the content!

    nursemillennial 1 month ago Reply

    Thank you! I’ve had my blog for about 1.5 years, I use themeforest for themes!

  • Marcelino Rusteberg 1 month ago Reply

    It’s laborious to seek out educated people on this topic, however you sound like you understand what you’re talking about! Thanks

    nursemillennial 1 month ago Reply

    Thank you so much!

  • Zita 1 month ago Reply

    I’m excited to discover this great site. I need
    to to thank you for ones time for this wonderful read!!

    I definitely liked every little bit of it and i
    also have you book-marked to check out new things in your blog.

    nursemillennial 1 month ago Reply

    Thank you for stopping by! Come back for more content soon!

  • Damion Cirilo 1 month ago Reply

    This will be the proper weblog if you really wants to check out this topic. You are aware of much its virtually challenging to argue along with you (not too I just would want…HaHa). You certainly put a different spin on the topic thats been written about for a long time. Excellent stuff, just wonderful!

    nursemillennial 1 month ago Reply

    Thank you so much!

  • email me form 1 month ago Reply

    Well written post. Thanks.

    nursemillennial 1 month ago Reply

    Thank you for stopping by!

  • seattle times 1 month ago Reply

    You’ve done an excellent job with this post.

    nursemillennial 1 month ago Reply

    Thank you for your feedback!

  • I am glad to read this post, it’s an impressive one. I am always searching for quality posts and articles and this is what I found here, I hope you will be adding more in future.

    nursemillennial 4 weeks ago Reply

    Thank you! Come back soon for more content!

  • cesme esford 1 month ago Reply

    I just want to say I am very new to blogs and truly savored you’re web site. More than likely I’m likely to bookmark your website . You amazingly come with superb articles and reviews. Regards for sharing your webpage.

    nursemillennial 4 weeks ago Reply

    I really appreciate it, thank you!

  • intensedebate 3 weeks ago Reply

    very Perfect post. Good Job..

    nursemillennial 3 weeks ago Reply

    thank you!

Leave a Reply