Consolidating federal student loans department education
This guide provides an in-depth explanation of the differences between federal loan consolidation and private loan refinancing, the pros and cons of each and insight into which options are best for different situations. News compared private lenders to come up with recommendations for different kinds of borrowers.There are a variety of private lenders that offer student loan refinancing, each with different potential interest rates, loan terms and features. When you consolidate your student loans, you essentially combine multiple loans into one.To facilitate the consolidation, a lender will pay off your current loans and issue you a new loan for the total amount you owe.This type of consolidation won’t save you money on interest, but it can make it easier to manage your loans with a single payment each month.
No private student loan refinancer is perfect for every borrower. Overview: Common Bond was started by three Wharton MBA graduates in 2011.
Here are some additional requirements: If you just graduated with three federal Direct Subsidized loans, one for ,000, one for ,000 and one for ,000, and you get a job earning ,000 a year in San Francisco, you’ll pay off the loans in 10 years and pay a total of ,409 once you start making payments under the Standard Repayment Plan.
Kantrowitz encourages borrowers to compare both the monthly payment and the total payments over the life of the loan when considering consolidating or refinancing loans.
Some debt relief companies offer to consolidate your loans for a fee, but this isn’t necessary. You’ll have to submit your name, address, Social Security number, driver’s license state and number, contact information and two references who’ve known you for at least three years. This information should be on your monthly billing statement.
“Never pay a fee to consolidate your student loans,” says Kantrowitz. You don’t need to consolidate all your loans, and doing so may be a bad idea in some circumstances.
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If you extend your loan terms, you will have a lower monthly payment.