First, they should be sure the interest rate is fixed and not variable so they don’t risk falling victim to a higher rate later on.
Even if you’re satisfied with the terms of the loan, it’s important to consider that by refinancing your federal debt into a private loan you lose many of the government protections offered to federal borrowers.
By consolidating your education loan(s), your interest rate will be fixed and determined by the weighted average of the interest rates on the loan(s) being consolidated, rounded to the nearest higher one-eighth of one percent.
You may determine your interest rate by using the Repayment Estimator on the click on the Repayment & Consolidation tab.
Student borrowers may consolidate, or refinance, their federal student loans, including Direct, Stafford, and Perkins loans, into a federal consolidation loan. There are two main reasons borrowers decide to consolidate their federal loans: a fixed interest rate and lower monthly payments.
Other reasons include the convenience of having just one loan with one monthly payment and preventing one from defaulting on one's loans.
Using automatic payment ensures that on-time payments will be made; this option should be considered by every borrower entering loan repayment.
But if they consolidate their loans into Direct Loans they can use those payment plans, which allow borrowers to make payments tied to their incomes.
So student borrowers can’t combine their loans with their parents’ loans for example.
Be wary of refinancing your federal student loans with private companies: A variety of relatively new private lenders, including So Fi and Common Bond, offer certain student loan borrowers the option to refinance their federal loans at lower interest rates with the companies.
You may call the Loan Consolidation Center at 800.557.7392 with any questions after you submit your application.
Unlike other types of consumer debt, it’s impossible to refinance a federal student loan and have it stay a federal student loan. Elizabeth Warren (D-Mass.), Democratic presidential front-runner Hillary Clinton and others have proposed giving federal student loan borrowers the option to refinance their loans to take advantage of lower interest rates.
It might be a good idea to lower that payment, especially when you’re first coming out, but it is not a way to whittle down the amount that you owe.” You can contact your servicer, the private company that is typically borrowers’ main point of contact when paying back their student loans, or consolidate through the federal government’s website Student