Does consolidating student loans
Even if your student loans don’t strain your wallet, consolidating them into one payment could free up additional cash, or help to structure payback of your loans on your terms.
Private student loans are granted and managed by regular lending institutions – banks, college foundations, various state agencies – and typically charge a higher fixed or variable-interest rate than federally funded loan programs.
Private student loans are credit-based, meaning student borrowers with better credit scores will pay lower interest rates than those with lower scores because banks assess the risk of each borrower.
Consolidated public loans under the federal government program are considered paid in full by the new loan.
The program was created to encourage educational pursuits by making otherwise unmanageable public loans practical for repayment and in a timely fashion.
There are two primary types of educational loans — private and federal.
While both may be eligible for consolidation, it is important to think of these two types independent of each other when considering consolidation.
Learn more about private student loans Federal student loans are the easiest and most beneficial to consolidate because they offer low interest rates, increased payback terms (which decreases the monthly cost) and because they reduce the number of lending institutions you have to pay every month. That difference is also why you should never consolidate private and federal loans into a single loan.
For example, instead of making multiple payments to multiple lenders at various times of the month, you simplify the equation by making a single monthly payment. The best practice is to consolidate federal loans and private loans separately.
With federal programs expending approximately 4 million in 2010-11, student loan consolidation has been a well-received solution to student debt management.Prior to July 1, 2006, students could consolidate their public loans while they were enrolled in school full time. Students can either consolidate during the six-month grace period after graduation or wait until after the loan enters the repayment phase.