Consolidating loan school
(See more below.) See also: When people talk about student loan consolidation, they’re generally referring to consolidating federal loans through a Direct Consolidation Loan from the U. When you refinance, a private bank purchases all your loans and provides you with an entirely new loan and a new, often lower, interest rate that’s based on your debt-to-income ratio and credit history.
You also get a new loan if you consolidate with the federal government, but the resulting interest rate is simply the weighted average of all the interest rates on all your old loans.
Some of the highly vetted lenders we currently work with and recommend are: the lenders at the top of your list to see what their customer service is like.
Since you'll be in a long-term relationship with your lender once you refinance, you want to make sure that not only their rates and loan terms are good but that they'll respond appropriately when you need by completing an initial inquiry with your top two or three choices.
Here’s why: when you consolidate federal loans, the U. Department of Education sets your consolidated interest rate as a weighted average of the interest rates of all your old loans, rounded up the nearest one-eighth percent.
But if you consolidate your loans by refinancing with a private lender, you may qualify for a lower interest rate that could save you money both in the short-term and the long-term.
And it isn’t based on your credit score — which can be a positive if your credit isn’t good, or if you have a fairly new credit history.
However, if you have a high credit score and you consolidate to a federal loan, you may lose out on getting a lower interest rate that could save you thousands of dollars over the life of your loan.
Once these lenders give you an initial offer with an interest rate, loan terms, and an estimated monthly payment, compare the results side-by-side.
A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation.
Therefore, a student who is applying for loan consolidation cannot include the PLUS loan the parent took out for the dependent student’s education.
Or you may want to pick and choose and leave some loans out of the equation.
When you consolidate your student loans, you combine all your separate student loans and pay them off as a single new loan.
Like federal consolidation, refinancing allows you to combine your loans intotake this 7-question quiz to find out.