Student Loan Consolidation
Student loan consolidation comes in two forms: consolidation
of federal loans into a Direct Consolidation Loan and private student loan
consolidation. Make Lemonade has some solid analysis on the similarities and
differences between each type of student loan consolidation. The important
thing to remember are your goals and whether you want to combine only your
federal student loans or want more flexibility to consolidate both your federal
and private student loans.
Consolidate
Student Loans
If you would like to consolidate student loans with the
federal government, Make Lemonade has a helpful student loan calculator that
shows you the differences when you consolidate student loans and refinance
student loans. Interestingly, you save more money when you refinance student
loans because your interest rate and monthly payment decreases. When you
consolidate student loans, your interest rate doesn’t decrease, but is a
weighted average of your existing student loan debt interest rates.
Private Student
Loan Consolidation
One of the benefits of private student loan
consolidation is that the borrower can refinance student loans that are both
private and federal. This is different from student loan consolidation with the
federal government in which the borrower can only consolidate federal student
loans. Therefore, private student loan consolidation has more flexibility than
student loan consolidation with the federal government, even if the latter
offers forbearance and deferrals.
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