In order to finance the expenses incurred during the years they are students, people who take out student loans should try different options to pay student loans if they do not have the income to pay when they start to pay back student loans. This is because if they delay or fail to repay even one of their student loans, their credit score is considerably reduced. Persons who have difficulty paying student loans for any reason can make their payments by converting consolidate student loans. There are two types of consolidate student loans; federal and private. Federal student loans consolidation includes only federal student loans, while private student loans consolidation (refinancing) includes both federal student loans and private student loans.
Consolidate student loans are often confused with refinance student loans. Therefore, it is necessary to know the contents of both.
Consolidate federal student loans;
Persons with multiple federal student loans convert these loans into a single loan through the Department of Education. There are multiple federal student loans repayment plans, and you to be eligible some of them require consolidate federal student loans. Interest rates on consolidate federal student loans do not change. Only if your consolidate federal student loan has a long term, your monthly payments and interest rate will fall. However, in addition to the principal, you pay more interest and the total amount you pay increases. In consolidate federal student loans, you do not lose the rights you have earned when you have your old federal loans, but you lose those rights in consolidate private student loans.
Consolidate private student loans;
Consolidate private student loans are also referred to as refinance student loans. Consolidate private student loans are quite different from consolidate federal students. Consolidate private student loans are financed by a new loan from a private lender if you have more than one federal student loan, multiple private student loans, or both types of student loans. Not only does the lender change in the new loan, but also the interest rate of your student loan changes.
What are consolidate federal student loans?
If you are not satisfied with Navient customer service or your repyament plan, the consolidate federal student loans are an option for you. If you want to have consolidate federal student loans, you can consider this option if:
- Want a single federal loan payment, but don’t need it to be drastically lower.
- Need to consolidate to be eligible for income-driven repayment or public service loan forgiveness. This is the case if you have Federal Family Education, Perkins or parent PLUS loans.
- Are in student loan default and want to get back on track.
If you want consolidate federal student loans, you should consider the following disadvantages;
- Consolidate federal student loans are not the best strategy for some borrowers.
- You can’t pick the federal loan servicer that handles your new consolidated loan. (you could end up with Navient again)
- To consolidate wrong federal loans could result in borrowers not being eligible for preferred repayment plans.
For consolidate federal student loans, the government pays your federal student loans and replaces them directly with a consolidation loan. After you leave school, graduate or drop below half-time enrollment, you are eligible for consolidate federal student loans. The Department of Education consolidates your federal student loans free of charge. So stay longer than companies that want to consolidate federal student loans by charging you a fee.
The interest rate on consolidate federal student loans will be the weighted average of the interest rates of your previous federal student loans and will be rounded to the next 1%. For example; If the average interest rate is 6.78%, the interest rate on consolidate federal student loans is 6.88%.
How to consolidate federal student loans?
If you want to consolidate federal student loans, the first thing you need to do is log in by visiting studentloans.gov. Then click ‘Complete Consolidation Loan Application and Promissory Note’. Here you will see the “What do I need?” Option. Allow yourself half an hour to obtain the documents listed in this option.
- Choose which loans you want to consolidate federal student loans.
- When you consolidate federal student loans, you must choose a repayment plan for obtaining a new federal student loan. Depending on your credit balance, you can receive a payment timeline or choose one that ties payments to revenue.
- You must read the contents of the form before sending. Continue to make student loan payments as usual until consolidated federal student loans are approved.
How to consolidate private student loans?
Consolidate private student loans are another option if you are not satisfied with your phase rates, repayment plans, or Navient customer service. You can change your lender in consolidate private student loans. For consolidate private student loans you need a good income and a good credit score. If you meet these requirements, you can work with companies that offer you low interest rates, such as CommonBond, SoFi and Laurel Road.
Consolidate private student loans usually require at least 600 credit points and interest rates range from 2% to 9%. If you want to have consolidate private student loans, you can consider this option if:
- A stable job.
- Made at least a few on-time student loan payments after leaving school.
- Access to a co-signer with those characteristics, if that doesn’t sound like you.
- Good or excellent credit, generally defined as credit scores of 690 or higher.
As a result, consolidate student loans is an option that make it easier for you to pay your student loans. It would be more appropriate for people with federal student loans to choose one of the two options, considering loan amounts, loan terms and loan interest rates, and with the assistance of credit advisors, if possible. However, if you want to pay student loans faster, you need to opt for consolidate private student loans. This makes you pay more monthly. If your income is not eligible to pay more, it is better to opt for consolidate federal student loans because they have a longer maturity but less monthly payments. The important thing is to pay in full and on time.