Consolidating student loans advice
You’ll save money if your new loan has a lower interest rate.» MORE: Best student loan refinance companies Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance.A Direct Consolidation Loan has a fixed interest rate for the life of the loan.The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent.There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. Department of Education (ED) or ED’s consolidation loan servicers. Once your loans are combined into a Direct Consolidation Loan, they cannot be removed.You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee. There’s no need to pay anyone for assistance in getting a Direct Consolidation Loan. The loans that were consolidated are paid off and no longer exist.When you consolidate federal loans, your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next ⅛ of 1%.
Consider federal consolidation if you: When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan.
The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.
A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. Similarly, if you have Federal Perkins Loans and you are employed in an occupation that would qualify you for Perkins Loan cancellation benefits, you should not include your Perkins Loans when you consolidate.
To do this, many or all of the products featured here are from our partners. Private consolidation is often referred to as refinancing.
These processes are often confused, but they’re very different. refinancing Private student loan consolidation, or refinancing, means replacing multiple student loans — private, federal or a combination of the two — with a single, new, private loan.