But some lenders or banks will allow you to combine your private loans into one lump sum under one interest rate. Not only that, but their interest rates are also usually higher than a direct consolidation of your federal loans. Double ouch. There is a silver lining though. Tomato, to-mah-toe, right?
Student loan consolidation and student loan refinancing are two completely different things. Consolidation takes the weighted average of your interest rates on your loans and rolls them into one. So if your rates and payment terms are killing you, refinancing your student loans might be a good option for you.
The goal is to end up with a better interest rate and repayment terms. Who wants to do that? And never— never— agree to a variable interest rate. Because variable interest rates change based on market rate. Do yourself a favor and steer clear! Not even for a minute. Get laser focused, get on a budget , and pay off your student loans as fast as you can.
Use the Student Loan Payoff Calculator to calculate how quickly you can pay off your loans by making extra payments. Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since Millions of people have used our financial advice through 22 books including 12 national bestsellers published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.
Guided Plans. Trusted Pros. Free Tools. What Is Student Loan Consolidation? Get a new student loan rate from a Ramsey-trusted company in 10 minutes. About the author Ramsey Solutions. We recommend you compare your current loan terms against the consolidation loan terms. For example, you may not want to include loans with a lower interest rate than the consolidation loan. Find out if student loan consolidation is right for you.
Are there any loans that aren't eligible for consolidation? The following student loans aren't eligible for consolidation: Loans for K education, Post-graduate loans e. Can I change my mind and reverse the consolidation after it is complete? You will have 30 days, from Approval Disclosure, to accept the loan terms and a three-day right-to-cancel period, following Final Disclosure, before the consolidation is complete.
However, once your loan is disbursed, and we pay off your existing loans, the process cannot be reversed. Can I consolidate loans that I have previously consolidated? Can I add a loan to my consolidation loan once it has been approved?
Once you've received the Approval Disclosure and accepted the loan terms, no additional loan s can be added. If you need to add a loan, you can cancel your existing application and reapply with the additional loan s. How long does it take to get a consolidation loan? Do I need a cosigner?
Students may have the option to apply with a creditworthy cosigner. By applying with a creditworthy cosigner, you may receive a lower interest rate. How is my rate determined? Your interest rate will be based on your credit history, your choice of a fixed or variable interest rate, and your cosigner's credit history if applicable. What is the difference between a fixed interest rate and variable interest rate? A fixed interest rate is set during the time of application and does not change during the life of the loan.
This may cause the monthly payment to increase, the number of payments to increase, or both. What is an Auto Debit Reward? To enroll for automatic payments, complete the enrollment form online or call us at STUDENT to request a copy of the enrollment form, complete it and mail it back to the address on the form. Learn More. Can I consolidate while I am still in school? You can choose to consolidate while you are still in school, during your grace period or after your grace period expires.
If you choose to consolidate while you are still in school or during your grace period, you will lose any remaining grace period on the loans that you are consolidating, and you will begin making payments approximately days after your loan is disbursed. What is my repayment period? A repayment period is the period of time during which scheduled payments are required to be made to repay the principal balance and interest on a loan.
Your repayment period can be 10 or 20 years, based on your creditworthiness. When is my first payment due? Your first payment will be due approximately days after your consolidation is complete and the loan is disbursed. Is there a penalty for paying off early?
There is no pre-payment penalty. Making additional payments can help you lower the total cost of your loan. Can I defer payments? In addition, you can also defer payments while: On active military duty up to 3 years In public service with certain eligible organizations up to 3 years In a health professions residency program up to 5 years Learn More. What if I need help making my monthly payments? If you are experiencing financial difficulties and you are unable to make your student loan payments, we have options to help.
Is student loan consolidation right for you? Potential Benefits Other Considerations A lower interest rate You'll have the option to choose between a fixed or variable interest rate. If you have a fixed rate loan s and are considering refinancing your loan s into a variable rate consolidation loan, you may receive a lower interest rate, but your rate may change if the rate index changes.
If your repayment term is extended, it will take you longer to pay back your loan and you will increase your total loan cost. To reduce the cost of borrowing, you can make additional payments without penalty. Simplify monthly payments You have the option to consolidate your federal and private student loans into one loan and monthly payment. If you choose to consolidate your federal student loan s , the features and benefits associated with those loan s will not apply to your new consolidation loan.
For example, certain repayment options, such as Income-based repayment, loan forgiveness for public service and other benefits will no longer apply to your new consolidation loan. Apply on your own You need to qualify for the consolidation loan on your own. If you choose to apply with a creditworthy cosigner, you may receive a lower interest rate. If you choose to consolidate loans that currently have a cosigner, your cosigner will no longer be responsible for the loans you include in your new consolidation loan.
See Full Comparison. You'll have the option to choose between a fixed or variable interest rate.
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Consider private student loan consolidation if you have:. Good or excellent credit, generally defined as credit scores of or higher. Refinancing federal student loans into a private consolidation loan means losing consumer protections specific to federal loans. Those include the option to tie payments to income and opportunities for loan forgiveness.
Like the federal government, private companies offer the option to consolidate multiple student loans into one. But while you can't transfer private loans to the federal government , you can consolidate both federal and private loans with a private lender. The goal with this process is not only to get the ease of a single payment, but to receive a lower interest rate based on your financial history.
Use a consolidation calculator to compare monthly payments under three different scenarios: federal student loan consolidation, private student loan refinancing and income-driven repayment plans. See if you pre-qualify for refinancing and compare real rates — not just ranges or estimates. Consider federal consolidation if you:.
Need to consolidate to be eligible for income-driven repayment or public service loan forgiveness. Are in student loan default and want to get back on track. When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan. Consolidating your federal loans through the Department of Education is free; steer clear of companies that charge fees to consolidate them for you.
So, for instance: If the average comes to 6. Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors. You should consolidate your federal loans if you want to make a single monthly payment or need to consolidate to qualify for programs like Public Service Loan Forgiveness.
If you want to save money by lowering your interest rate, consider private loan consolidation — also known as refinancing. You can consolidate federal student loans with the Department of Education or a private lender, which is also called refinancing. If you refinance federal loans with a private lender, you'll lose access to government programs, like income-driven repayment and Public Service Loan Forgiveness. You can consolidate federal student loans for free with the Department of Education at studentaid.
If you want to consolidate — or refinance — your loans with a private lender, apply directly on the lender's website. Log in to studentloans. Enter which loans you do — and do not — want to consolidate. Choose a repayment plan. You can either get a repayment timeline based on your loan balance or pick one that ties payments to income. Read the terms before submitting the form online. Continue making student loan payments as usual until your servicer confirms consolidation is complete.
If your loans are in default, consolidation is one of a few methods to get your loans back on track. To consolidate defaulted loans you'll need to make three full, on-time consecutive monthly payments on the defaulted loan and agree to enroll in an income-driven repayment plan. You can sign up for free on studentloans. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.
Really get to know your money and find cash you can put aside and grow. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Federal loans often allow a host of deferment and forbearance options in case you lose your job or experience other financial hardships. They also offer income-driven repayment plans and loan forgiveness.
Consolidating with a private refinanced loan could mean that you'll forfeit those protections and opportunities under the terms of the new loan. If you're thinking about consolidating, take the time to understand:. Use a consolidation calculator to find out what your payments would be by consolidating with the federal government or by refinancing with a private company.
Really get to know your money and find cash you can put aside and grow. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. Pros of student loan consolidation.
Pro: It will be easier to manage your debt. Loan amount. Term length. Pro: You could get a lower monthly payment. Pro: You can pick your federal loan servicer. Cons of student loan consolidation. Con: You might not save money. Con: A longer repayment term means you pay more interest over time.
The following loans can all be considered for a Direct Consolidation Loan:. If your loans are in good standing, you can complete the Direct Consolidation Loan application online at: studentaid. Access to a paper application and additional directions are also available on this website. If you are in default on a federal student loan, you may still be eligible for consolidation; however, you will need to meet certain requirements.
Visit the Federal Student Aid website for more information. Repayment on a consolidation loan will generally begin within 60 days of disbursement, unless the borrower qualifies for a deferment or forbearance. Consolidation loans, like all federal education loans, do not have a prepayment penalty, so aggressive payments can be made to save time and money.
Interest Rates for Consolidation Loans The interest rate for Direct Consolidation Loans is fixed for the life of the loan and is based on the weighted average of the interest rates of the loans being consolidated. More Consolidation Loan Information For additional details and step-by-step consolidation guidance, review the Federal Student Aid website studentaid. This infographic outlines the steps needed to qualify and obtain forgiveness under the Public Service Loan Forgiveness PSLF program, while also providing helpful insight, tools, and resources to use in the pursuit of PSLF.
Access free financial calculators, articles, and videos to help you create a budget, track your spending, create financial goals, and enhance your financial knowledge about credit, financial planning, money management, and more! This comprehensive financial guide helps professionals at all levels of the medical education continuum navigate the complexities of financing medical school by borrowing wisely and repaying student loan debt responsibly.
It means you can consolidate your private loans — as well as your federal loans — with a private bank, credit union or online lender. Refinancing is an option if you have a credit score in at least the high s and a steady income, and are unlikely to need the safeguards of federal loans, such as income-driven repayment and loan forgiveness. The amount of time you have to pay back your federally consolidated loan will depend on how much you owe:.
When you refinance privately, you could have your pick of multiple loan terms, depending on the company. A longer repayment term means a lower monthly payment. You could also end up with a lower monthly payment if you refinance your loans with a private company.
But if you're unhappy with your servicer and want to consolidate your federal loans, you can pick from one of nine servicers to manage your new direct loan moving forward. Consolidating your federal loans is a strategic move to help you manage your debt.
If you consolidate with the federal government, your new interest rate will be the weighted average of your federal loans' interest rates, rounded up to the next one-eighth of the percentage point. Private refinancing could lower your interest rate — and thus lower your payment or shorten your repayment term. An extended repayment term means saving money on your monthly payments, but it also means paying more in interest in the long run. Make sure you understand all of the fine print before you refinance federal student loans.
Federal loans often allow a host of deferment and forbearance options in case you lose your job or experience other financial hardships. They also offer income-driven repayment plans and loan forgiveness. Consolidating with a private refinanced loan could mean that you'll forfeit those protections and opportunities under the terms of the new loan.
If you're thinking about consolidating, take the time to understand:. Use a consolidation calculator to find out what your payments would be by consolidating with the federal government or by refinancing with a private company. Really get to know your money and find cash you can put aside and grow. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page.