How to Consolidate or Refinance Navient Student Loans

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Updated on Thursday, October 11, 2018

Do you have Navient student loans? Are you looking into options to pay those loans off more quickly or cheaply? Is consolidation or refinancing a good way to do this?

Navient is one of a small number of companies that services federal student loans for the Department of Education. It also services private loans. As your loan servicer, Navient handles your customer service and takes your payments.

While many borrowers stay with Navient until their loans are repaid in full, others decide to consolidate student loans that Navient is servicing or look into Navient student loan refinance options. Consolidation and refinancing work differently, but both can sometimes make paying off student debt easier.

There are pros and cons to refinancing or consolidating Navient student loans, so if you’re thinking about doing either, make certain this is the best course of action for you. You’ll also need to go through the proper process to arrange these options.

To help you out, here are the specific steps you should take — and the factors you might want to consider — if you’re thinking about consolidating or refinancing loans serviced by Navient.

1. Understand the differences between refinancing and consolidating Navient student loans

First things first: It’s important to understand that consolidating loans and refinancing loans are not the same processes.

What does consolidation mean?

Consolidation refers to a direct consolidation loan. Direct consolidation loans make it possible to get one big loan to repay existing federal student loans. You could consolidate multiple federal loans serviced by Navient or, for that matter, federal loans serviced by other companies. Either way, the consolidation loan is obtained through the Department of Education.

With consolidation, you end up with one single payment for your federal loans, instead of potentially dealing with multiple payments. You can also have access to more repayment plan options with consolidation, and may become eligible for Public Service Loan Forgiveness if you weren’t already.

But you will not lower your interest rate when you consolidate because your new loan will charge interest based on a weighted average of the rates on your existing debt, rounded up to the nearest one-eighth of a percentage point.

What does refinancing mean?

If you refinance student loans that Navient is servicing, the process is different. Your refinanced loan isn’t obtained through the federal government since the Department of Education doesn’t offer a refinancing option. Instead, you’ll need to find a private lender.

Unlike with consolidation, you can refinance federal or private student loans, or a combination of both. The goal of refinancing is not only to get one big loan to repay existing debt, but also to reduce the interest you pay by qualifying for a new loan with more favorable repayment terms.

Refinancing could save you money, but there are some significant downsides associated with refinancing federal student loans that you need to consider before moving forward.

2. Determine if consolidation or refinancing is right for you

Now let’s look at the advantages and disadvantages of refinancing and consolidation to see if either is right for you.

Pros and cons of consolidation

One of the biggest benefits of consolidation is that you can simplify the loan repayment process. If you have multiple loan servicers, it can be much easier to consolidate and have just one servicer with which to deal. You’ll only have one monthly bill when you’re done with the process.

And, if you aren’t happy with Navient, consolidating allows you to switch who you’re dealing with for the rest of your student loan repayment.

Because consolidation can allow more options for repayment plans, including some lasting as long as 30 years, you can also reduce monthly payments. But if you stretch out your payments over a long time, you’ll pay more in interest.

As mentioned above, consolidation also opens up new options for income-driven repayment and loan forgiveness.

There are big downsides too, though. If you’re eligible for borrower benefits on your Navient loans, such as interest rate discounts, you may lose access to this benefit.
And if you’ve been making payments to qualify for Public Service Loan Forgiveness or have been working on paying loans on an income-driven plan, you’ll lose credit for payments you’ve already made and will have to start over.

Pros and cons of refinancing

Opting to refinance Navient student loans also has some pros and cons to consider.

If you refinance, you may be able to reduce your interest rate. This can lower your monthly payment and reduce the total amount you end up paying on your debt. This refinancing calculator can help you to estimate your savings.

You can also refinance multiple federal and private loans so that you end up with just one big loan and one payment instead of owing Navient and other servicers.

The major disadvantage, however, is that you lose borrower protections if you refinance federal student loans. If Navient is servicing your direct loans and you refinance them into a private loan, you’ll no longer be eligible for loan forgiveness for public service work, nor will you qualify for income-based repayment.

You also won’t necessarily be able to put loans into deferment or forbearance to pause payments as you can with federal student loans. Some private lenders do provide limited options for loan forbearance post-graduation if you experience financial hardship, but you’ll need to check with your new lender. And, generally speaking, private options are often far more restrictive than with federal loans.

3. Complete the consolidation or refinance process

If you’ve decided to consolidate or refinance Navient loans, you’ll need to complete some specific steps. Here’s what to do next.

The consolidation process

To consolidate loans, you’ll first have to complete the direct consolidation loan application available on the Department of Education website. If you apply online, the entire application will need to be completed in one sitting, and most people finish in less than 30 minutes, according to the department. Otherwise, the applicable forms can be downloaded for those who don’t want to use the electronic application.

When you fill out your application, you’ll need to provide information about the loans you wish to consolidate. You’ll also need to select your repayment plan and read the online terms before submitting your application.

Note that the application is free — and beware of anyone who tells you otherwise.

When the Department of Education receives the complete application, it’ll begin processing your request. You may receive a phone call asking for more information. Once your information has been reviewed, you’ll receive a notice before the consolidation is final. The notice will detail which loans you’re consolidating and the total payoff amounts verified by your loan servicer.

Your notice will give you a deadline, and you’ll need to act before then if you decide you want to cancel the consolidation or don’t want to consolidate all the listed loans. Unless you notify the Department of Education that you don’t want to continue, it will pay off your existing loans and you’ll have your new consolidated loan on which to start making payments.

During the interim period while you wait for the consolidation to go through, be sure to keep paying Navient and any other loan servicers.

The refinance process

The refinancing process works differently than consolidation for many reasons, including the fact you’ll have to shop around among different private student loan companies offering student loan refinancing.

As you look at different lenders, compare their offers for things such as:

  • Qualifying requirements
  • Interest rates
  • Repayment timelines
  • Whether you have the option for cosigner release if you need a cosigner
  • Loan company reputation
  • Origination or application fees, if any

It’s important to compare apples to apples when deciding between different student loan refinancing options. For example, most lenders offer both fixed- and variable-rate loans. Variable-rate loans might start out lower than fixed-rate loans, but they could go up over time because they’re tied to financial indexes that rise and fall with the market. If you compare two loans but one is a variable rate and the other is a fixed rate, you aren’t making a fair comparison.

When you’ve found a lender you think will offer you reasonable terms, submit an application to refinance your loans. You’ll need to provide details about your income and the loans you want to refinance. Private lenders consider your credit and income to determine if you’re eligible. If you can’t qualify on your own, it may be worth seeing if you can get a cosigner to help you.

When your application is approved, the private lender will repay your existing student loans and you’ll start making payments on your new refinanced loan.

Consolidating or refinancing can make repayment easier — but know what you’re getting into

For many borrowers, it could make sense to consolidate or refinance Navient student loans to streamline your repayment process.

Some borrowers may also wish to consolidate or refinance if they don’t feel they’re being treated fairly by Navient. Navient is facing multiple class-action lawsuits from borrowers who accuse the company of steering them to costlier repayment options.

You can contact the office of your state attorney general to report dishonest or abusive practices, and you can also consider looking into consolidation or refinancing to get a different loan servicer.

There are many reasons to consider consolidating or refinancing student loans, but be sure you know what borrower protections you may be giving up before you move forward.

This article contains a link to Student Loan Hero, which, like MagnifyMoney, is owned by LendingTree.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Do you have a question?