refinancing, either might be a good option for you — provided you understand their differences. Consolidation is best as a strategic move. It bundles multiple federal loans into a new federal loan to let you make a single payment or qualify for government programs. Student loan refinancing is best to save money.
You can consolidate all, just some, or even just one of your student loans. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea. ... Interest rates for consolidation loans are fixed.
Consolidation has its cons, too: Because consolidation usually lengthens the repayment period, you will likely pay more interest over the long run. ... Consolidating your current loans will cause you to lose credit for any payments made toward income-driven repayment plan forgiveness or Public Service Loan Forgiveness.
Consolidating your student loans also won't affect your credit score much. Federal consolidation doesn't incur a credit check, so it won't hurt your credit score.
Consolidating your federal student loans may streamline repayment by replacing several loans with a single loan and a single monthly payment, but it will not save you money. ... There is no longer any opportunity to use consolidation to lock in an interest rate, since the interest rates on these loans are already fixed.
The biggest drawback of refinancing your student loans is giving up the protections that you otherwise receive with federal loans, such as income-driven repayment plans.
Best Student Loan Refinance Companies of May 2021
There are two other instances in which your loans may be forgiven without making a payment:
Student loan forgiveness is possible after 20 years if you're only repaying undergraduate loans, or after 25 years for any of the loans you're repaying from graduate school or professional study. Student loan forgiveness is possible after 25 years of repayment.
Debt consolidation rolls multiple debts, typically high-interest debt such as credit card bills, into a single payment. Debt consolidation might be a good idea for you if you can get a lower interest rate. That will help you reduce your total debt and reorganize it so you can pay it off faster.
Yet No Comments