Consalidating student loans
However, it's important to note that by consolidating, you'll lose any credit you've already earned toward income-driven repayment plan forgiveness.
Private student loan consolidation has become much more prevalent over the past few years.As the Class of 2014 has already been crowned the most indebted in history with a whopping average student-loan debt of $33,000 before receiving their tassels, more and more college students are considering consolidating student loans in an effort to save money.Student loan consolidation is defined as a process in which individuals take out a new loan to pay off existing student loans and work on repaying the single large loan.This means that you must be currently in repayment for your student loans and making payments, or within the allotted six-month grace period before entering repayment.Applying for student loan consolidation will also require that you have good repayment history on your loans and have not defaulted.Depending on the type of loan that you are considering taking out, consolidation may potentially lead to paying more total interest, having a larger total loan repayment amount, and receiving more strict repayment penalties.
If you are currently in the grace period on your student loans, consolidation will negate this period and throw you immediately into repayment.
When you have several individual student loans, you have the ability to pay down your highest-interest loans faster.
As a personal example, I have separate student loans for every semester I was in school.
Federal student loan borrowers can choose a standard 10-year repayment plan or an extended term, but also have the ability to take advantage of unique and potentially money-saving options such as the Pay As You Earn plan or other income-driven repayment options.
If you obtain a federal Direct Consolidation Loan, you are still eligible for these alternative repayment plans.
In order to qualify for consolidating your loans into one, there is a general set of requirements that you must meet first.