Federal Student Loan Consolidation
It is important to consolidate your federal student loans BEFORE
consolidating your private student loans. Never combine federal and
private student loans under the same consolidation loan because you
will lose the benefits associated with federal loans by doing so.
Federal student loans have several advantages over private student
loans: lower interest rates, tax-deductible interest, and the
opportunity to extend your payment period up to 30 years through
consolidation. In addition, there are situations in which your debt
can be deferred, or even forgiven, if you return to school.
Private
Student Loan Consolidation
Federal loans are often not enough to cover the full expense of a
college education. Therefore, private loans are sometimes a
necessary choice for students seeking higher education. You may have
received these private loans from such top loan providers as Sallie
Mae Signature, Citibank, Bank of America, and NextStudent. The next
step in repayment is private student loan consolidation.
It is
important to consolidate your private student loans because they tend to
have higher interest rates, shorter payback periods, and a lack of certain
protections in comparison to federal loans. The sooner you can consolidate
your private student loans into one loan and potentially lengthen your
repayment period, the better off you will be. If your current student loan
debt exceeds 8% of your income, or if you have borrowed more then $5,000 in
private loans, you should consolidate your debt to avoid default and prevent
negative effects to your credit. Remember not to consolidate your private
and federal student loans into a single consolidation loan because you will
lose the benefits of your federal loan |
