Consolidating student loand
When you consolidate student loans through private lenders, you essentially are refinancing your loans.
Combining several student loans, whether federal or private, only makes sense if you are going to receive a lower interest rate and reduced monthly payment terms.
If you sign and date the application, it is a binding contract.
The Direct Consolidation Loan program is the right choice if your goal is to simplify the process for repaying federal loans and keep your options open for the many repayment plans available for federal loans. If you’re using private lenders for student loan consolidation, there is a chance you could get a better interest rate and possibly lower monthly payments. That’s because federal loan rates are so low – fixed rates of 4.45% for undergraduates, 6% for graduates in 2017-2018 – that it’s difficult for private lenders to beat the rates and make a profit.
Both federal and private lenders recognize that lower monthly payments help may be the best option, if you don’t get the job you want immediately after graduating from colleges.
Find out more about the choices debt consolidation offers.
This will decrease the chances of accidentally missing a payment, and the lower payment will help you budget month-to-month.
Student loan consolidation won’t strengthen your credit rating directly, but the benefits of consolidation can ensure your score continues to trend upward.