Consolidation and Refinancing in World Economy

Consolidation is the process of combining multiple loans into one new loan.
Refinancing is the process of issuing a new loan with a new interest rate or term.

When it comes to consolidating and refinancing student loans, you have two options:

The U.S. Department of Education offers a Direct Consolidation Loan, which combines your federal loans into one new loan. The new interest rate is a weighted average of the interest rates of your old loans.

Pros:
• Easy to qualify as long as you hold certain federal student loans
• Allows for one convenient monthly payment instead of paying multiple bills
• Gives you the option to enroll in Income-Driven Repayment Plans and qualify for Public Service Loan Forgiveness
Cons:
• Only federal student loans are eligible
• Since interest rates are averaged, you'll pay roughly the same amount of interest over the lifetime
• Income-driven repayment plans can result in more interest over repayment