Unfortunately, student loans – and the debt that comes with them – is commonplace for today’s student. Consolidating loans is a good way to wrap all your loan debts into one package. It may also lower your current loan payments but take longer to pay off – sometimes up to 30 years. This means you’ll end up paying more in interest over time. Also consolidating all your loans into one – called a direct consolidation loan – means you are locked into paying that back since it has now taken the place of your previous loans.
To be able to consolidate your loans, you’ll need to be attending school as just a part-time student, have graduated from school or left school completely. Most federal loans can be consolidated, but if you have private loans, you must meet certain requirements if you’re in danger of defaulting on your loan. Once your loan is consolidated, you can start making new payments in a couple month’s time or sooner.
If you have a private loan – through a bank, credit union, or other financial institution – refinancing may be the better choice for you. You can generally get a lower interest rate than a direct consolidation loan, which adds interest on top of your other loans, and you may be able to pay off a loan quicker when refinancing. However, you have to have good credit to be able to refinance.
To learn more about student loan forgiveness, click the link to find our Guide To Student Loan Forgiveness.