Now that interest rates are somewhat down, loans can be consolidated or in some cases, refinanced. If you are thinking about refinancing student loans or want to consolidate student loans, you must compare interest rates before you continue. Like any debt, student loans can influence your credit and your future decisions. Students who borrowed more than $5,000 are less likely to pursue higher education. In addition, student loan debt that exceeds 8% of your income can be seen negatively when your credit is assessed for future loans. This is especially true if you have one or more defaulted student loans. The simplest and quickest way to reduce your student and school loan debt is to consolidate student loans. Loan consolidation will immediately result in lowered debt and payments if the average interest after consolidation is lower than it is before. This is really just refinancing one or a group of federal student loans, at a lower interest rate – exactly as refinancing a mortgage loan at a lower interest rate would reduce monthly payments and the total amount paid. There are two kinds of school loans - private and federal. Federal school loans are generally at a lower interest rate than you could get for an unsecured private school loan. Because of the nature of the federal loans, you should never consolidate both private and federal loans into a single private loan. Because only federal loans carry government backing, they can be refinanced at a much lower interest rate than can privately financed school loans. So when you come to consolidate student loans, do the federal loans together and then look at consolidating your private student loans.