Consolidating a private loan with a federal loan
Both options have their own set of pros and cons, which can vary based on the goals, priorities, and financial situation of the borrower. Consolidating federal loans is free, and companies that charge fees to consolidate them should be avoided.Below, we have addressed the most common of concerns regarding the “Federal vs. When you consolidate federal loans, you get a new interest rate.Rather than multiple bills every month, you’ll be making payments to just one provider. Unlike consolidation, refinancing is only possible through private lenders.This means that when you refinance your federal student loans, you would no longer be eligible for federal repayment and forgiveness programs.Therefore, consolidation may not be the right choice for you if a lower interest rate is your main priority.
For example, if you aren’t settled into your career or are living paycheck to paycheck, you’ll want to stick with federal consolidation so that you don’t lose forgiveness and repayment options.Generally, the two primary motivators for consolidation are lowering interest rates and combining payments into one that is easier to track.However, the lower interest rate is usually achieved through a combination of refinancing and consolidation under the correct circumstances.This is the weighted average of your previous interest rates rounded up to the next ⅛ of 1 percent.Federal student loan consolidation does have its fair share of benefits.