When you apply for a student loan consolidation, the interest rate you receive depends not only on your current financial status but also on the student loan consolidation program you choose. Private student loan consolidation offers the best student loan refinance rates for most borrowers. However, they come with a few disadvantages. Read on to find out more about student loan consolidation rates and alternatives.
Federal student loan consolidation programs offer refinance student loans backed by the federal government. There’s no tax required on these types of student loan consolidation applications. That’s why many students prefer to get their federal student loan consolidation through the federal government’s Direct Loan Consolidation Loan Program. The downside to this approach is that it comes at a cost – the federal government charges a fee for each loan and, if the borrower does not repay, the government will have to pay the lender.
Private student loan consolidation programs are available for borrowers who want lower interest rates and other benefits unique to that specific type of loan. For example, some private student loan consolidation programs offer deferment opportunities, which allow students to delay payments until they have finished college. This allows students to continue paying off their student loan debt while they complete their post-secondary education. Other private loan consolidation programs do not offer deferred payments; however, they do offer private student loan debt deferment options for borrowers who have poor credit histories and a high number of late payments or default accounts.
When you start refinancing your education loan, your rates will vary based on your credit history, income and other factors. The interest rate you get will also depend on the type of student loan consolidation you choose. One type of student loan consolidation involves getting a single loan with one lender. Your loan representative will work with all of your lenders to find the best rate for you. Some graduates decide to get multiple student loan consolidation loans, which allows them to spread the cost of education across different lenders and pay less interest overall because of the lower, consolidated interest rate.
The amount of student loan consolidation you’ll need depends on how many student loans you have and how much each individual loan is currently costing you. If you have a large number of student loans, you could qualify for a rate reduction. In some cases, your payments may even be reduced enough to make paying them off more affordable. Talk to your lender about student loan refinancing options and consider consolidating your student debts only when your interest rates to make repayment more affordable.
No matter which option you choose, refinancing can help you save money. You can also easily keep up with payments by choosing an adjustable-rate loan that has a lower interest rate than your current interest rate. In most cases, a lower interest rate will save you money in the long run.