Consolidating student school loans


Before consolidating student loans, it's important to know what benefits you will receive from consolidation.If your credit score or financial situation hasn't changed much since you first applied for loans, you may not see much of a difference in your quoted rates.When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans.“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.

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Keep in mind if you refinance your federal loans with a private lender, you will no longer be eligible for current and future federal benefits such as eligibility for loan forgiveness programs.For example, you may need to identify the types of federal loans you have and their repayment statuses.Review the consolidation eligibility criteria on the federal student loan website to learn more.However, if you have a steady income, have made payments on student loan and other debts, or want to switch from a fixed to variable rate, consolidation may be beneficial for you.If your primary objective is simplifying monthly payments, consolidation could be a beneficial means to do so even if your financial situation hasn't changed enough for you to qualify for lower rates.Plus, if your credit score has improved, you may be eligible for better rates.

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