Consoldating student loans
“With (our student loan program), if the borrower makes 12 months of on-time principal and interest payments, they can request to release the co-signer,” he says.
Along with gaining a new degree, many graduates will also leave campus with new student loan payments they’ll have to fit into their post-graduate budgets.“If the terms you’re going to get are the not as generous as the terms you already have, consolidation is probably not a good idea,” she says.Regardless of whether consolidating federal or private loans, there is a catch.When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans.“The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you’re consolidating,” says Ken O’Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.While loan consolidation can sometimes dramatically lower a borrower’s monthly payments, Kevin Walker, co-founder of the college finance site Simple Tuition.com, says it can also cost you.
“The downside of getting a lower monthly payment is that you’re going to subject yourself to substantially more interest charges over the life of the loan,” he says.
Those seeking consolidation should also review their repayment options at Student gov, so they’re prepared to pick the proper repayment plan.
Once the application is submitted, the federal government estimates that it takes 60 to 90 days to officially complete the consolidation process.
Know that you might need a higher credit score if you want the best rates without a co-signer.
Federal consolidation loans come with borrower protections private lenders may not offer.
Here’s what you need to know before deciding to consolidate student loans.