Start Consolidate loanstudent consolidating student loan student

Consolidate loanstudent consolidating student loan student

“The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you’re consolidating,” says Ken O’Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.

Betsy Mayotte, director of regulatory compliance for the student debt assistance group, American Student Assistance, makes sure to tell borrowers to stay away from consolidation loans that combine federal and private loans.

Consolidating both types of loans excludes borrowers from federal protections.

One major advantage of federal consolidation loans is that borrowers don’t need a stellar credit score to qualify, they can apply any time (even if their loan is in default) at Loan gov, and they’ll always get a fixed interest rate.

Regardless of how the market fluctuates, borrowers will never pay more than 8.25 percent on their consolidation loans.

Unlike federal loans, it can be trickier to get your private loans consolidated.

Private lenders require borrowers to pass a credit check to get the best rates.

Most also have limits on how much you can consolidate.

Know that you might need a higher credit score if you want the best rates without a co-signer.

Federal loan borrowers can also lower their monthly payments by extending the life of their loan, having their payments capped according to their income and by having their debt dismissed after making 25 years of consecutive payments under the income-based repayment plan.

But borrower protections and repayment options on private consolidation loans can vary wildly from lender to lender.

This can be attractive to borrowers because the consolidation frequently results in longer repayment periods and lower monthly payments.