Through this website you can access information about your federal student loans. A private consolidation loan or refinancing a student loan allows you to combine all or some of your student loans, private and federal student loans, into one larger private consolidation loan through a private lender or bank. If you are approved to refinance or consolidate your existing private student loans into a new private loan, the terms of the consolidation loan may allow you to lower your interest rate, lower your monthly payment by extending the length of the repayment term, or release a co-signer from your student loan.
Consolidating federal student loans into a private consolidation loan has risks. You should weigh the benefits and risks of refinancing your federal student loan into a private student loan, because changing from a federal to a private student loan eliminates some of these protections and benefits. If you have a secure job, emergency savings, strong credit, and are unlikely to benefit from forgiveness options, then refinancing federal student loans into a private student loan may be a choice worth considering.
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Skip to main content. Student loans. Federal Direct Consolidation Loan If you have federal student loans, you have the option to combine all or some of your federal student loans into a federal Direct Loan Consolidation. Private consolidation loan A private consolidation loan or refinancing a student loan allows you to combine all or some of your student loans, private and federal student loans, into one larger private consolidation loan through a private lender or bank.
Look closely if you are switching from a fixed rate loan to a variable rate loan. Many people were not thinking far enough into the future when they got their student loans, but the last thing you want to do is consolidate them without understanding the consequences. Save my name, email, and website in this browser for the next time I comment. Answering questions helps me identify the issues borrowers face and makes this site a better resource.
Written By: Michael P. Lux, Esq. Federal interest rates suck. Consolidating a Federal Loan into a Private Student Loan: The Basics Traditionally, federal student loan consolidation is a process offered by the federal government. Why is Consolidation Such a Big Decision?
The biggest risk comes from consolidating federal loans into a private loan. What Perks are Lost? Who Should Consolidate? How Do I Make the decision? If you have the credit score and income to consolidate, look at it as an insurance question.
About the Author. Have a Question? I love getting reader emails! Ask The Sherpa. Follow the Sherpa. Privacy Policy Terms of Service. This may make it easier to keep track of your student loans. Some older federal student loans have a variable interest rate. If you have a variable rate student loan, your interest rate can go up or down over time. Direct Consolidation Loans have a fixed interest rate, meaning your interest rate will not change over the life of the loan.
The fixed interest rate for a Direct Consolidation Loan is the weighted average of the interest rates of the loans being consolidated, rounded up to the nearest one-eighth of a percent. A Direct Consolidation Loan could make you eligible for several repayment plans that may not be currently available to you.
If you have federal loans through the Federal Family Educational Loan FFEL program or the Perkins loan program, you may be able to consolidate those loans to qualify for several repayment programs. Consolidating federal loans may cause you to give up other benefits. Borrowers with Perkins loans should talk to their servicers about the risks associated with consolidation.
If you have Direct Loans and you are already making qualified payments on those loans under an income-driven repayment plan, consolidating your Direct Loans into a new loan will cause you to lose credit for any payments you have made towards loan forgiveness. You can learn out more about what type of loan you have through the U. Through this website you can access information about your federal student loans.
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