Consolidating student loans advice

A Direct Consolidation Loan has a fixed interest rate for the life of the loan.

The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent.

The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.

Consider refinancing if you have: Refinancing federal student loans into a private loan means losing consumer protections specific to federal loans.

You’ll save money if your new loan has a lower interest rate.

» MORE: Best student loan refinance companies Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance.

To do this, many or all of the products featured here are from our partners. Private consolidation is often referred to as refinancing.

These processes are often confused, but they’re very different. refinancing Private student loan consolidation, or refinancing, means replacing multiple student loans — private, federal or a combination of the two — with a single, new, private loan.

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