Consolidating federal graduate student loans old man dating younger woman
You may be able to reduce that monthly chaos by consolidating your student loans into a single monthly bill.But if you’re considering consolidation, you’ll want to understand your options and the potential impacts before you take any big steps.But if you consolidate your loans by refinancing with a private lender, you may qualify for a lower interest rate that could save you money both in the short-term and the long-term.Reducing your interest rate by even 1% could yield thousands of dollars in savings over the life of your loan.You also get a new loan if you consolidate with the federal government, but the resulting interest rate is simply the weighted average of all the interest rates on all your old loans.And it isn’t based on your credit score — which can be a positive if your credit isn’t good, or if you have a fairly new credit history.As we mentioned above, there are some important things to consider before you apply to consolidate your student loans, like whether you’ll lose access to federal benefit programs.Refinancing with a private lender — and the resulting consolidation of your loans — may not be the best choice for you right now if: If you consolidate your student loans through the federal Direct Consolidation Loan program, you’ll retain eligibility for federal loan forgiveness, deferment and forbearance, as well as income-driven repayment plans.
Whether you’ll save money by consolidating your loans depends on your particular situation.
For instance, consolidating your student loans through a federal Direct Consolidation Loan could lower your monthly payments in the short-term if you extend your repayment term, but you may end up paying more over the life of the loan than you’re paying under your current plan.
Here’s why: when you consolidate federal loans, the U. Department of Education sets your consolidated interest rate as a weighted average of the interest rates of all your old loans, rounded up the nearest one-eighth percent.
However, if you have a high credit score and you consolidate to a federal loan, you may lose out on getting a lower interest rate that could save you thousands of dollars over the life of your loan.
Both federal consolidation and private refinancing allow you the opportunity to: However, if you refinance federal student loans with a private company, you lose access to federal income-based repayment plans and loan forgiveness programs.
Private student loans are not eligible for consolidation through a federal Direct Consolidation Loan, but you can consolidate your private student loans by refinancing with a private lender.