Student loan consolidation is just what it sounds like – taking two or more loans, refinancing them together and making one new loan. Consolidating your student loans is a great way to free up cash, lower your monthly payment and simplify the payment process. If you’re a recent graduate, or are still making monthly loan payments, this may be the right move for you.

What loans can be consolidated?

Let’s start with the types of loans that can be consolidated. When it comes to funding your college education, you’ve got federal student loans and private student loans. Federal loans are through the government and private student loans are typically through a financial institution.

While both can be consolidated, federal loans offer unique income-based repayments and forgiveness that typically aren’t offered through private lenders. Make sure you’re aware of what options you have with your federal loan. From there, you should be able to determine if they’re worth consolidating.

How much will I pay for my loan?

One of the ways consolidation can give you some extra financial wiggle room is by lengthening the term of your loan – the longer the term, the lower your monthly payments. For example, if you have a $20,000 loan with a 3.90% APR (annual percentage rate) and a 5-year term, you’d be making monthly payments of $367.43, making the total cost of the loan $22,046.

If you take that same $20,000 loan, with a 3.90% APR but a 15-year term, you could be making payments of $146.94 to repay the loan. That gives you an extra $220.49 every month that you could put into savings or an interest earning account! Keep in mind, while that frees up some cash, those low payments increase the total cost of the loan to $26,449 with interest.

If you’re looking to make your monthly payments more manageable, then consolidation could be exactly what you’re looking for. But, if you can manage those higher payments, you could end up saving more money in the long run.

How does it make the process easier?

Juggling more than one student loan can be difficult, especially with a cell phone bill, rent, car payments and everything else you have going on. It can be easy to miss a payment if you’re not managing your finances properly.

Student loan consolidation simplifies the payment process, giving you one monthly payment. That’s one bill due on one date each month. This can help you get organized and less apt to miss a payment. Making payments on time is crucial because any late or forgotten payments can affect your credit score.

Challenge yourself to go one step farther and make your payments automatic. It takes the hassle out of remembering to pay your bill. Not to mention, many loan servicers offer interest rate reductions when you automate your payments.

Student loan consolidation isn’t right for everyone. If you can handle your monthly payments or only have a couple years left on your loan, it may not make much sense for you.

But if having one, lower monthly payment sounds like a fit for your financial lifestyle, talk to your trusted financial institution to see what options are available to you.