One way to consolidate your debt is to apply for a federal Direct Consolidation Loan.
With this method, the Direct Consolidation Loan is used to pay off your old debts.
And if you do qualify, but you’re at the high end of the spectrum, your slightly lowered payments may come at a through the refinancing process won’t make sense for every borrower, but it provides great benefits for some.
Now that you know it’s an option and you understand how it works, you can better assess whether it’s right for you.
It will have a fixed interest rate based on a weighted average of the loans you consolidate.
For instance, you might be able to get a much lower interest rate and shorten your repayment term.
Although consolidating won’t save you money, it can make repaying your loans easier.
For example, the government’s Pay As You Earn (PAYE) and Income-Based Repayment (IBR) programs allow borrowers to make reduced monthly payments based on financial hardship.
But if your income is over a certain threshold, you won’t benefit from these programs.
These are clearly great programs for people who choose careers in public service or education, but if that’s not you, they won’t do you any good.