Getting a federal consolidation loan isn’t usually considered as “refinancing” since the interest rate of the new loan is equal to the weighted average of the loans being consolidated.
With a private consolidation loan, a private lender writes a new loan that pays off the old loans.
The interest rate is primarily determined by the lender’s evaluation of the borrower’s credit history.
However, some lenders also factor in the borrower’s current financial and professional circumstances.
Because the interest rate is a weighted average and rounded up, borrowers won’t ever save money on interest by opting for a federal consolidation loan unless the loans are pre-2006 and have a variable interest rate.