Consolidating student loans through the department of education

27-Dec-2019 20:07 by 9 Comments

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However, the interest rate on your new, consolidated loan is not a weighted average of your old loans’ rates.Instead, a private lender will look at your track record of handling debt and other financial information to give you a new (ideally lower) interest rate on your consolidation loan.

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With student loan consolidation, you may be able to refinance at a lower interest rate, decrease your monthly payment, or both!

Answering these questions will go a long way to helping you make the right choice.

You may not be able to change the fact that you have student loans, but you can make smart decisions about them.

Bottom line: when you consolidate student loans with a private lender, you are also in fact refinancing those loans. Choose a variable interest rate loan, which can be a cost-saving option if you plan to pay off your loan relatively quickly.5.

Student loan refinancing As noted above, student loan refinancing is when a new loan is used to pay off one or more existing student loans. Enjoy the benefits of consolidation, including one simplified monthly bill.

The ability to switch out older, variable rate federal loans for one fixed rate loan, which could protect you from having to pay higher rates in the future if interest rates go up.

(Note: the last variable rate federal student loans were disbursed in 2006.Before you combine federal and private student loans, be aware that federal loans offer certain benefits and protections, such as Public Service Loan Forgiveness and income-driven repayment plans, which do not transfer to private lenders.If you’re considering refinancing, you should first find out if any of these benefits apply to you.This is a somewhat complicated question, especially since these terms are sometimes used interchangeably. Federal loan consolidation Federal loan consolidation is offered by the government and is available for most types of federal loans—no private loans allowed.For example, consolidation simply means combining multiple student loans into one loan, but you get different results by consolidating with the federal government vs. Student loan refinancing is when you apply for a loan under new terms and use that loan to pay off one or more existing student loans. When you consolidate with the government, your existing federal loans are combined into one new loan with a new rate, which is a weighted average of your old loans’ rates.Since then, all federal loans have been fixed rate.)3. But beware—this is usually the result of lengthening your payment term, which means you’ll actually have to pay more interest over the life of the loan.