Federal Private Student Loan Consolidation - If you're burdened with multiple student loans, you can consolidate them into one loan with a fixed interest rate based on your current debt ratio to help pay off your debt. The idea is to make student loan debt more manageable, and potentially less expensive if done right.
There are two types of student loan consolidation that are often confused but are very different: student loan consolidation (federal loan) and student loan repayment, or private student loan consolidation.
Federal Private Student Loan Consolidation
Federal student loan consolidation is when you take out multiple federal loans and combine them into one federal loan. This is done through the Office of Federal Student Aid, Department of Education. Your new loan, a direct consolidation loan, is free. Instead of making multiple monthly payments, you will have one monthly payment.
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Student loan repayments are made through a private lender. If you have public and private student loans and want to consolidate them into one monthly payment, refinancing may be your only option. With refinancing, you negotiate a fixed or variable interest rate that must be lower than the individual interest rates on each of your existing loans.
You can't transfer private debt to the federal government, but you can consolidate private and federal debt through a private lender. If your financial return includes federal debt, you may lose repayment options and forgiveness plans, such as deferment and forbearance, that are included.
A deferment temporarily postpones the payment of a loan under certain circumstances. Interest usually does not accrue directly on the financing portion of the consolidation loan during this period. A forbearance temporarily stops or reduces your loan payments for a period of time.
There are no credit requirements for federal student loan debt consolidation. But only federal debts can be consolidated in this way. This may be a good option for you if:
Different Types Of Student Loans
With private student loan consolidation, or refinancing, your financial history begins to work with the new interest rate you'll receive. Your financial history includes your credit score, income, work history, and educational background.
You generally need at least a good credit score to qualify. Interest rates can range from about 2% to 13%, depending on the borrower whether the interest is fixed or variable.
The private student loan consolidation process is entirely up to the lender. But online lenders often offer a web-based application that takes 10 minutes or less to fill out and provides an answer within minutes.
Can You Refinance Federal Student Loans?
Many college graduates are left wondering if going to school was worth it given the economic climate of the last 25 years. In the past, a college degree almost guaranteed you a good job.
Now, graduates are scrambling to start their careers and sometimes get their foot in the door.
You still have debt even though you haven't finished your degree or gotten a high-paying job.
Just a reminder that it doesn't matter if you hate the show, the professors, the school, or the mascot. You've signed on the dotted line and it's now your responsibility until you pay off your debt.
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When debt upon loan is staring you in the face, it may be time to consider student loan consolidation.
Student loan consolidation is when you take out a new loan that pays off your existing student loan. In the process, you simplify from multiple payments with providers to just one monthly payment.
With a federal student loan, you take out a new federal loan through the Department of Education. This gives you one monthly payment, and one loan that covers all of your student loans.
The interest rate is based on the estimated amount of the loan you are taking. Keep in mind that the fixed interest rate may differ from the 8% interest rate used on most student loans. It can be more or less.
Student Loan Flowchart
Consolidating private student loans is also called refinancing. If you qualify with a private lender, you can roll your existing loan into a new loan while lowering your interest rate and saving money.
You cannot combine public and private loans into one new loan with the Department of Education. However, you may be able to get a personal loan.
(Note: 'Should I consolidate my student loans?' is a question we get here all the time. That's why we've created this easy, free guide to help you understand how Whether student loan consolidation is the right choice for you. Click here to learn more.)
Student loan consolidation is a new student loan arrangement with the Department of Education that pays off all of your current student loans and consolidates them into one loan.
Should I Refinance My Federal Student Loans?
Consolidation doesn't save you money over the life of your loan, but you can access new payment plans or forgiveness plans.
On the other hand, student loan refinancing is a financial choice you make when working with a private lender.
You can take advantage of lower interest rates, and consolidate both your student and personal loans in the process. Refinancing can save you money.
When you consolidate your federal and private loans into the program, you lose access to federal protections and repayment options.
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Your entire financial history will be considered when you apply for financing, and used to determine your interest rate.
Because the interest rate is determined based on the balance, a direct consolidation loan may not save you as much money as it would by consolidating all debts into one easy payment because... It's hard to keep track.
And, let's be honest, when debt exceeds income, we get depressed, pretend it doesn't exist, eat ice cream, and watch Netflix.
Since refinancing is only available through private lenders, you miss out on the corporate benefits that come with these loans.
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But the terms of the refinance loan will be completely different and you may be able to negotiate a lower interest rate.
I suggest you go through your credit union or shop around for a football player. They're more likely to kiss your back than discuss your business.
Talk to several credit unions and see which one offers the best terms. Of course, this will be based on your income and credit score so stop applying for credit cards.
Most graduates leave school with debt at least once a year. If you struggle to keep track of your monthly payments, consolidating is a great way to simplify multiple monthly bills into one.
Should I Refinance My Student Loans?
If your payments are more than you feel comfortable paying, consolidation can allow you to extend your repayment period and lower your monthly expenses.
(Bonus tip: Looking for a complete guide to knowing if you should consolidate your debt? Here are the 17 most important factors that will help you decide if you should consolidate your debt. Or not. Click here to learn more and get the free guide.)
Integration may seem like a no-brainer, but it's not for everyone. Depending on your situation, something is wrong.
When you consolidate, you can choose to exclude certain debts from your consolidation loan. For example, if you are applying for Public Service Loan Forgiveness (PSLF) on your Direct Loans, you must give up your Direct Loan to avoid losing the benefits of the forgiveness.
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(Did you know? Consolidation can lower payments, shorten the term of the loan, offer forgiveness benefits, and offer higher interest rates. Find out if you need your Federal student loans should be consolidated with a comprehensive 17-page guide to the most important things to consider. Click here to read more and get a free guide.)
If you fall behind on federal loans, the government can begin garnishing your wages (15% of your wages) without you being able to file a lawsuit. Private creditors need to take you to court before they can begin garnishing your wages. Consolidation gives you a way to prevent wage garnishment, by:
Yes, student loan consolidation can lower your payments. You can choose a longer payment term that lowers payments, choose an income-based payment plan, or refinance with a private lender and qualify for a lower interest rate. .
Federal student loan consolidation will not lower your interest rate. Paying off private student loans can lower your interest rate if you qualify — and you can consolidate your federal debt with your private lender if you choose to do so.
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USSLC has many 5-star reviews for its customer service, efficiency, and ability to streamline processes. Loan officers are rarely interested in working with you to save money. You are just another number to them. USSLC can be reached by phone at
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