How to consolidating student loans

This interest rate may be higher or lower than the weighted average of the current interest rates on the borrower's private student loans.If the credit scores have improved significantly, this may lead to a lower interest rate, potentially saving the borrower money.

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Repayment of consolidation loans begins within 60 days of disbursement.

Repayment terms can be extended from 10 years up to 30 years, based on the amount consolidated and the repayment option that you choose.

Also, borrowers may rehabilitate defaulted loans by consolidating them and agreeing to repay them in the income-based repayment plan.

The interest rate on a federal consolidation loan is a fixed rate equal to the weighted average of the interest rates on the federal education loans that are being consolidated, rounded up to the nearest one-eighth of one percent.

For example, suppose a borrower has a $7,500 loan at 3.4% and a $10,000 loan at 3.86%.

The interest rate on the federal consolidation loan would be This would then be rounded up to the nearest one-eighth of a point, or 3.75%.

Consolidation does not always save you money or make the loan easier to repay.

This article discusses some of the reasons for and against consolidation.

Borrowers may also change repayment plans at least once a year.

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