Consolidating student loans hurt

Here’s how: Federal loan consolidation doesn’t have a credit requirement, and it offers the benefit of a single loan bill and potentially lower payments.But it’s only for federal loans, and it won’t cut your interest rate.

The definition of loan consolidation in a nutshell, is this: One loan, one payment, one lender.Consolidating your federal loans through the Department of Education is free; steer clear of companies that charge fees to consolidate them for you.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%.Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.

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