Do you feel weighed down by student loan debt? If so, you might consider consolidating or refinancing your loans to lower your monthly payments. In many cases, this can be a smart financial move. But before deciding to 澳洲幸运5官方开奖结果体彩网:consolidate or 澳洲幸运5官方开奖结果体彩网:refinance, it pays to first figure out how to do, as the exact process will vary🔜 depending on whether you have federal or private loans.

How Does Student Loan Consolidation Work?

There are two basic ways to 澳洲幸运5官方开奖结果体彩网:consolidate your student loans. You can do so either through a private lender or the federal government. Only federal loans are eligible for federal consolidation.

In the case of a private student loan consolidation (often referred to as refinancing), a private lender, such as a bank, pays off your private or federal student loans. It then issues you a new loan at a new rate and with a new 澳洲幸运5官方开奖结果体彩网:repayment schedule. Refinancing makes the most sense if you ꦗhave high-interest private loans and can obtain a significantly lower rate or better terms with the new loan.

However, with federal student loans, another option includes combining them into a new 澳洲幸运5官方开奖结果体彩网:direct consolidation loan through the Federal Direct Loan Program. Your new 澳洲幸运5官方开奖结果体彩网:interest rate will be the weighted average of your previous loans, and you will remain eligible for some of the special features of federal loans.

While you can’t consolidate private loans into a federal loan, if you have both 澳洲幸运5官方开奖结果体彩网:private and federal loans, you can consolidate the private on﷽es with a private lender and the federal ones through ඣthe government program.

How to Lower Your Federal Loan Payment

If you can’t afford to repay your federal student loan, you may be able to lower your monthly payment to a manageable amount through the 澳洲幸运5官方开奖结果体𒊎彩网:Saving on a Valuable Eduꦇcation (SAVE) plan.

The SAVE plan allows eligible borrowers to reduce their monthly payments, shorten the maximum time period for loan repayment, and avoid some interest charges. People already enrolled in the Revised Pay as You Earn (REPAYE) Repayment plan will automatically be moved to the SAVE plan.

Advantages and Disadvantages☂ of Student Loan Cಞonsolidation

Here’s a look at the major pros and cons of both private and federal loan consolidations.

Pros

澳洲幸运5官方开奖结果体彩网: Lower Monthly Payments

Private loan consolidation can help reduce your monthly loan payments by offering you a lower interest rate. This means lower payments overall and saving money over the life of the loan. Many graduates also find that they can get better interest rates because their credit scores improve over time.

Another way that a private consolidation or refinancing can cut your monthly payments is by extending the length of your loan. For example, if you refinance a 10-ye💟ar student loan into a 20-year loan, you will see a dramatic cut in your monthly payments. But signing up for a longer loan also comes with a big caveat, as we explain a little later on.

You may be able to reduce the monthly payments by consolidating your federal loan if you qualify for one of the government’s income-based repayment (IBR) plans. These plans set your monthly payments according to how much you earn or how much you can afford to pay.

Fewer Monthly Payments

Keeping track of multiple student loan payments, on top of all your other bills, can be a hassle. Consolidating your student loan deཧbt can help you reduce your bills to just one (or two, if you consolidate your private and federal loansไ separately, as is advisable).

Many private lenders even offer a slightly lower interest rate if you enroll in an 澳洲幸运5官方开奖结果体彩网:automatic payment plan. This option saves you a small amount of money each month, and it helps you to avoid ever forgetting a payment.

Flexible Repayment Terms

When you consolidate your loans with a private lender, you can choose how long you want the loan to last and whether it carries a fixed or 澳洲幸运5官方开奖结果体彩网:variable interest rate. Choosing a variable rate can be riskier since rates can go up anytime, but it can also get you a lower interest rate at the start of the loan. Federal consolidation loans carry a 澳洲幸运5官方开奖结果体彩网:fixed interest rate.

Releasing a Co-Signer

Another benefit of refinancing your private loans is that you might be eligible to sign for the loan on your own. Dropping a 澳洲幸运5官方开奖结果体彩网:co-signer, who is typically a parent or another close family member, not only gets them off the hook for your debt but also may raise their credit score and allow them to access new lines of credit if needed. Federal loans don’t typically involve co-signers.

Cons

You Could Pay More in the Long Run

While a longer-term loan can mean lower monthly payments, you could end up paying tens of thousands of dollars more over the life of the loan because of the accruing interest.

You Could Lose a Federal Loan’s Advantages

If you consolidate a federal student loan with a private lender, you’ll lose the option to sign up for an income-based repayment plan. You’ll also no longer be eligible for federal 澳洲幸运5官方开奖结果体彩网:loan forgiveness and cancellation programs. These are major reasons to consolidate your federal loans only through the federal program.

Any Existing Grace Periods May Go Away

As soon as you take out a 澳洲幸运5官方开奖结果体彩网:refinanced student loan with a private lender, you must start repaying it. With many student loans, you can delay payments while you are still in school or if you have entered a graduate program. If your current loan is still within its 澳洲幸运5官方开奖结果体彩网:grace period, wait until that period ends before starting the refinancing process.

How to Consolidate Student Loans

You can consolidate your student loans through many financial institutions, including your local bank or credit union, in addition to lenders that specialize in these types of loans. Among the well-known names in the field are Earnest, LendKey, and SoFi.

You can find more information about the steps for consolidati༒ng your federal loans on the U.S. Dꦇepartment of Education’s .

The Bottom Line

Students and parents have the option to 澳洲幸运5官方开奖结果体ꦉ彩网:refinance student loans or to consoli🏅date these loans. Consolidating your multiple student loans can be an easier way to keep tr𓃲ack of the debt that you owe. Refinancing one or several loans might get you a lower interest rate or change the repayment term.