As you think about repaying your student loans, you may want to consider consolidation or refinancing as an approach to managing your debt. While each of these offers potential benefits, you should also understand their limitations and potential costs.

Let’s begin by looking at the difference between consolidation and refinancing. In short, student loan consolidation combines multiple loans into a single loan, while student loan refinancing entails opening a new loan to pay off one or more student loans. Both offer the opportunity to combine your debt into a single monthly payment, but each option also comes with potential pros and cons, as described below.

Student Loan Consolidation

If you have taken out more than one federal student loan, you may be spending more time than you’d like juggling various due dates, terms and interest rates. The convenience of a consolidation loan may be a good option for you. A Direct Consolidation Loan pulls multiple federal student loans together into one loan. The interest rate on this loan is based on the weighted average of the various loans it brings together, and that rate is fixed, meaning it will not change over the term of the loan. 


  • Simplifies repayment of federal (not private) student loans through one monthly payment.
  • Provides ongoing access to the federal loan protections, repayment options and forgiveness programs associated with these loans. For example, some borrowers may choose an income-based repayment plan, and borrowers who work in public service may be eligible to have their federal loans forgiven after 10 years of repayment.
  • May lower your monthly payment (with a term extension). 


  • Does not give you the opportunity to pay a lower interest rate.
  • May cost you more over the life of the loan (with a term extension).
You can apply for or learn more about federal loan consolidation at

Student Loan Refinancing

If you would like to manage fewer loans, but you have private student loans in addition to federal, refinancing may enable you to combine those into one loan, with one monthly payment. You may also choose to either shorten or extend your term when you refinance, depending on your goal:

  • If your goal is to pay your debt off sooner and reduce the amount of total interest you pay, you may opt for a shorter term with a higher monthly payment.
  • If your goal is to reduce your monthly payment, then you may decide to extend your term over a longer time period; keep in mind, however, that extending the term will raise the overall cost of the loan, since it will incur more interest.

Refinancing differs from consolidation in that it requires you to apply and qualify for a new loan to pay off your existing loans. Lenders consider your credit history, income, debt-to-income ratio and other factors in determining your eligibility and interest rate. What you should consider as you explore various lenders and loan options is whether they offer (depending on your priorities) a lower annual percentage rate, or APR (interest rate plus fees); a shorter term; and/or lower monthly payments than your existing loans.

  • Enables you to shop for a lower APR to save money over the life of the loan. You may also be offered the choice of a fixed or variable interest rate. 
  • Offers you the flexibility of choosing a shorter term to help you pay your debt off more quickly, or a longer term to lower your monthly payment.
  • May allow you to combine multiple federal and/or private loans into a single loan with a single monthly payment.
  • Eliminates access to federal loan protections, repayment options and forgiveness programs.
  • May cost you more over the life of the loan (with a term extension).
The more you know about your financial options, the better you can manage your debt. PNC offers tools to help you evaluate if refinancing might help you save money or time as you work toward paying off those student loans.