Debt Consolidation

Can debt consolidation help with student loans?

Debt consolidation can help with managing student loans and other forms of debt, particularly when it comes to high-interest or private loans.
Bruce Hodges
November 17, 2023
Apply to Parachute and start your journey to financial wellness.
Apply now
Table of Contents

Can debt consolidation help with student loans?

Paying off student loans can be a formidable challenge, especially when juggling multiple debts with varying interest rates. Debt consolidation has risen as a popular strategy for managing debts more efficiently. In Canada, many graduates wonder if debt consolidation could be the lifeline they need to tackle their student loans. Here’s an insightful look at how debt consolidation may help and how an innovative approach from Parachute could offer additional benefits.

Key Takeaways:

  • Debt consolidation can help with student loans, but it depends on the type of loan and its interest rates.
  • Consolidating your student loan debt may be helpful if you’re struggling with multiple high-interest debts, as it can streamline your finances.

Understanding Debt Consolidation

Debt consolidation is a financial strategy that involves combining multiple debts into a single loan. The goal is to streamline payments, secure a lower interest rate, and potentially shorten the repayment period. This can result in a more manageable monthly payment and could save considerable money on interest over time. It’s a practical solution for credit card debts, personal loans, and sometimes, car loans and student loans.

Student Loans and Debt Consolidation

When addressing student loans, consolidation can be slightly complex. Canada’s student loans program typically offers reasonable interest rates and flexible repayment terms. Therefore, the benefit of consolidating government student loans might not be as significant as consolidating private or high-interest debt.

However, if you're dealing with multiple private student loans or have other high-interest debts, consolidation can be advantageous. It could simplify your financial management and potentially reduce the amount you pay in interest, as long as the consolidation loan has a lower rate than your existing debts.

Understanding Different Types of Student Loans & How They Work

In Canada, student loans include both federal and provincial programs. The Canada Student Loans Program (CSLP) provides federal loans, while each province and territory manages its own student loan program. Federal loans offer fixed interest rates and flexible repayment plans. Provincial loans may have additional features, varying by region. Private student loans from banks or lenders are also an option.

Federal and provincial student loans often come with fixed rates, government support, and other features such as grace periods and income-driven repayment. Private loans may be more flexible, and are sometimes used to acquire more credit when federal or provincial loans fall short.

Can You Use Debt Consolidation for Student Loans in Canada?

Yes, students in Canada can use debt consolidation for their student loans. This simplifies repayment with a unified monthly payment. Private lenders like Parachute allow borrowers to merge multiple private or federal loans into a single loan with new terms.

Does Consolidating Student Loans Raise Your Credit Score?

Consolidating student loans in Canada does have the potential to influence your credit score. When you consolidate your student loans, a new loan is created, and this may impact your credit in several ways. If the new loan has more favourable terms, such as a lower interest rate or a more extended repayment period, it could positively affect your credit score. On the other hand, the act of applying for and obtaining a new loan can result in a hard inquiry on your credit report, which may have a minor, short-term negative impact. Overall, the impact on credit scores in Canada depends on factors such as the borrower's credit history, the terms of the new loan, and the specifics of the consolidation process.

Consolidating Student Loans with Parachute

If you’re considering consolidating your private student loans or high-interest debts, Parachute may provide the support you need. Keep in mind that consolidating government-issued student loans might not be beneficial due to their typically lower rates. However, for private loans or other forms of debt, Parachute can be an ideal partner in your financial journey.

Parachute is known for our unique results & approach to enhancing your financial wellness:

  • Cashback Rewards: Parachute incentivizes your journey to financial freedom by offering up to 10% cashback on your debt consolidation loan, rewarding you for positive financial actions that contribute to your well-being.
  • Focus on Existing Debt: Our primary objective is to consolidate your existing debts, rather than extending a new credit line. This keeps your total debt level stable and helps you focus on repayment.
  • Improving Financial Health: Our core mission is to leave you in a healthier financial state. By the end of your consolidation term with Parachute, you should enjoy improved cash flow, qualify for better interest rates, and boast an impressive credit score.
  • Monthly Savings: By consolidating with us, our customers save an average of $300 a month, thanks to our lower interest rates.
  • Loan Amounts and Terms: We offer debt consolidation loans ranging from $5,000 to $25,000 with rates from 24.99% to 29.99%, and flexible 30 to 60-month terms. Specifically, we focus on consolidating predatory high-interest debt, often above 46%.


Debt consolidation can be a practical step in managing student loans and other forms of debt, particularly when it comes to high-interest or private loans. With Parachute, you get a compassionate ally dedicated to not just easing your debt burden but also improving your overall financial health. If you’re navigating the complexities of student loans and seek to improve your financial situation, consider exploring how Parachute can make a significant difference in your life.

Bruce Hodges
Bruce, Founder and CEO of Parachute, worked for several of Canada’s top Banks, published research for the Canadian Bankers Association, and taught E-commerce Strategy in Wilfrid Laurier University’s MBA program. His first start-up built credit solutions for the likes of National Bank, Fair Isaac, and Ford Credit globally. Prior to starting Parachute, Bruce was COO of Foresters Financial, and EVP Transformation at CIBC, one of Canada’s top 5 banks. Bruce founded Parachute to disrupt the financial wellness space taking on payday, and high interest predatory lenders, with the intent to bring at risk Canadians back from the brink to good financial health.
Follow us:

More from our blog:

Start your path to financial well-being today.
Get a loan that gives you cash-back.

We truly believe financial well-being should be accessible to all Canadians. Our three step program empowers, educates, and rewards our customers. We offer the only loan where someone can leave with more savings than when they started.

Parachute is not a a bankruptcy, consumer proposal or debt management proposal company.
© 2022 WHF Inc. All rights reserved. and the designs are trademarks of White Hat Financial Inc. (‘WHF’) and used here under licence.