Consolidating fed student loans
This can be attractive to borrowers because the consolidation frequently results in longer repayment periods and lower monthly payments.
When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans."The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you're consolidating," says Ken O'Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.
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; click on the link below for more details.
[Back to top] Applying for consolidation takes most borrowers less than 30 minutes, according to the Federal Student Aid website.
Even if your rates seem high, t he Department of Education puts a cap on consolidation loan rates at 8.25 percent.
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%.
Many consolidation services offer fixed interest rates for the life of the loan, which can lock in your savings for years to come.
This is good since consolidation loans typically have longer terms than other loans - usually anywhere from 10 to 30 years.
Consolidation provides grads with the ability to combine their student loans into one megaloan, but it comes with drawbacks.
Along with gaining a new degree, many graduates will also leave campus with new student loan payments they'll have to fit into their post-graduate budgets.