Should I Consolidate or Refinance My Student Loans?

Should I Consolidate or Refinance My Student Loans?

Both consolidation and refinancing can simplify your student loan payments but deciding which one to use can be confusing. Learning about the differences between what consolidation and refinancing have to offer can make this decision easier. Knowing what each of these deals requires and their limitations are also important. However, if you are struggling with bankruptcy, consider talking to a Chattanooga bankruptcy lawyer for advice.


When it comes to consolidation and refinancing differences, the key difference is whether the interest rate changes. Consolidation and refinancing both combine all the smaller student loans into a simplified single loan. This can make the process of paying off the loan less confusing.

Consolidation will not usually change the total interest rate or principal balance. The only thing consolidation tends to do is combine your smaller loans into one large loan. Refinancing will give you a new interest rate, new terms, and a new monthly payment. Both the interest rate and monthly payment could be lower with refinancing.

With refinancing, you do not have to refinance all your student loans. You have the option to pick which loans you would like to group together in your refinancing plan. Doing this the right way could lower your interest rate significantly.

The benefits of choosing student loan consolidation are not limited to simplifying your loan. This method can also potentially lower your monthly payment if your consolidation plan gives you more time to pay off your loan. Some people are given up to 30 years. You can also change variable interest rates to fixed interest rates.

The downsides of student loan consolidation are:

  • Taking longer to pay off your student loans
  • Paying more interest over time
  • You may lose borrow benefits like discounts


If you are interested in student loan refinancing, there are certain steps to take. The first step is to search for the refinance plan that includes the best deal for you. What you want to look for are lower interest rates. You may have to look through several banks and credit unions before finding the right one.

Pick a loan lender when you know exactly what terms you are agreeing to. Be careful about rushing into a decision before knowing what you are signing up for. Do not hesitate to ask questions like:

Whether the interest rate will be fixed or variable

  • How high the interest rate will be
  • How long you will have to pay off the loan
  • Information on prepayment penalties
  • Penalties for missing a payment

When you feel confident, start the process of submitting the requested documents. You may need to provide your income verification, student loan statements, and basic identity information.


You may not have to go through bankruptcy alone. Feel free to call us at Tom Bible Law today at (423) 690-7712 for a consultation about your options for bankruptcy. Our team of Tennessee bankruptcy attorneys is prepared to help you find solutions to your bankruptcy problems. We are located in the Tennessee cities of Chattanooga and Tullahoma.

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