Student Loan Refinance Guide

What About Federal Student Loan Consolidation?


The U.S. Department of Education offers borrowers the ability to consolidate existing federally-backed student loans and Direct Loans owned by the federal government into a single loan. Though both consolidating and refinancing can combine existing student loan debt into a single loan, there are some significant differences.



What are the differences?


Direct Loan Consolidation is offered through the federal government, whereas refinance loan options are offered by private lenders such as Brazos.

Only federal loans are eligible for consolidation under the Direct Loan Consolidation program, whereas federal and private education loans are eligible for refinancing through Brazos.

The interest rate on the Direct Consolidation loan is the weighted average of your existing federal loans, regardless of credit history. Because the rate on a Brazos Refinance loan is determined in part by your credit score, you may be eligible for a lower rate.

Certain repayment options may be available through the Direct Loan Consolidation program that are not available through private lenders.

Consolidating under the Direct Loan Consolidation program will not require a credit check, whereas private refinance programs are credit underwritten, meaning you’ll need to pass a credit check to be approved.

Federal Direct Loan Consolidation Brazos Refinance Loan
Lender United States Department of Education Brazos Education Lending Corporation
What loans are eligible? Federal Loans Only Federal and Private Loans
Can I lower my interest rate? No Yes
Can I save money? No Yes, you can save money by lowering your interest rate and/or shortening the term of your loan.
Is a credit check required? No Yes
Are income sensitive or graduated repayment plans available? Yes No

What Repayment Options Are Available?


Repayment on a Brazos Refinance Loan typically begins 30 to 45 days after disbursement. Consolidation loans from the federal government are eligible for additional repayment plans, including graduated repayment plans and income sensitive repayment plans.

Direct Loan Consolidation is offered through the federal government, whereas refinance loan options are offered by private lenders such as Brazos.

If you believe you may need to take advantage of the Income Based Repayment or graduated repayment options offered by the federal government, a Direct Consolidation Loan could make sense.

Additionally, if you have federally-backed loans and are employed in a qualified “public service” position, you may be eligible for loan forgiveness programs not available with a Brazos Refinance Loan.

If you have federal loans, you can learn more about your repayment options and the Public Service Loan Forgiveness Program by visiting Federal Student Aid.21



Will I save money either way?


Not necessarily. Direct Loan consolidation of existing loans at the weighted average rate is not designed to save you money.

Direct Loan consolidation offers the ability to combine loans into one loan with one monthly payment, as well as the ability to extend the term of your loans in certain circumstances. While extending the term on your loans may result in lower monthly payments, you’ll pay more interest over the life of the loan.

Refinancing your student loans allows you to lower the interest rate on your loans, which could help you pay off your loans sooner, meaning you’ll pay less interest over the life of your loan.


Previous: Paying Off Your Loans Sooner Means Big Savings

BRAZOS RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. Brazos loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Program restrictions, other terms, and conditions apply. All loans are subject to individual approval and adherence to eligibility requirements and underwriting guidelines. Not all borrowers receive the lowest rate. If approved, your actual rate will be within the range of rates listed in this website and will depend on a variety of factors, including whether your loan has a fixed or variable interest rate, the term of the loan and your credit score. Rates and Terms are subject to change at any time without notice. Brazos loans are originated by Brazos Education Lending Corporation.

None of the information contained in this website constitutes a recommendation, solicitation or offer by Brazos or Brazos Higher Education to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.


How can we improve this site? Let us know.