Consolidating private student loans in default

04-Oct-2019 07:08

Here's how to decide whether refinancing or consolidating your student loans could make your finances more manageable.There are two methods for combining several student loans into one: federal consolidation and private consolidation, which is also known as refinancing.

Whether to go for one of these options, though, depends on the type of loans you have and how much you stand to save.If you're eligible for a lower rate than you currently pay, you could save a significant amount on interest, making it an especially appealing option for borrowers with high interest private loans.Before taking the plunge to consolidate and refinance student loans with a private lender, consider the following: Your credit score matters: Those with high credit scores will get the lowest interest rates on a refinance loan.Refinancing has the added benefit of reducing the cost of your loans if you qualify for a lower interest rate or monthly payment.Be sure to weigh the tradeoffs before refinancing, though, especially if you include federal loans in the bundle.

Whether to go for one of these options, though, depends on the type of loans you have and how much you stand to save.If you're eligible for a lower rate than you currently pay, you could save a significant amount on interest, making it an especially appealing option for borrowers with high interest private loans.Before taking the plunge to consolidate and refinance student loans with a private lender, consider the following: Your credit score matters: Those with high credit scores will get the lowest interest rates on a refinance loan.Refinancing has the added benefit of reducing the cost of your loans if you qualify for a lower interest rate or monthly payment.Be sure to weigh the tradeoffs before refinancing, though, especially if you include federal loans in the bundle.You may even consolidate as a way to get out of student loan default, as long as you either make three on-time payments beforehand or choose an income-driven repayment plan. Flexible repayment options: Federal student loan borrowers can choose among several repayment programs.