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Things to Consider About Federal Student Loan Consolidation

What is student loan consolidation?This means combining various student or parent debts into one from the same or different lenders. This results to easier monthly payment terms combining all interest rates into one fixed rate for the duration of the repayment tenure.What should you know if you are considering federal student loans consolidation?• Know about the advantages and disadvantages of consolidation.• You are paying more in terms of interest because you are requesting for the payment term to be extended.• Is consolidating your debts a good idea? Should you consolidate all or just some of your financial responsibilities? Consolidated rate is an average of your current rates so you might want to leave off a particular credit that has a high interest rate from the equation.• Know what your consolidated rate will be (you can use the Department of Education’s debt calculator to figure this out). Doing helps you determine if consolidation is best for you.• Your consolidation rate is the weighted average of your current interest rates rounded up to the nearest 1/8 not exceeding 8.25 % as calculated by your lender.• Interest rate depends on type of federal debts and the time when they were taken.• Consolidating your debts during your ‘grace period’ ensures that you have a lower interest rate but this requires that you start payments immediately.• Student loan consolidation is not possible while you are in school.• Don’t consolidate federal loans with private ones. You can lose some privileges this way like options to defer, forbearance application or forgiveness.• No payments are required to have your federal loans consolidated.

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