Consolidating student loans hurt


Consider refinancing if you have: Refinancing federal loans into a private loan means losing consumer protections specific to federal loans.Those include the option to tie payments to income and get loans forgiven if you work for the government or a nonprofit.You’ll get a new loan term between 10 and 30 years, depending on your balance. A longer term also will result in paying more in interest.But you can always pay off your loan faster if possible, which will save money.



For such installment loans, the important factors are how much total debt you owe and, of course, most importantly if you have missed any payments. It can be helpful if you have education debt from multiple lenders or student loan guaranty companies.The application takes most borrowers less than 30 minutes, according to the Federal Student Aid website. You must complete the application in a single session, so gather the documents listed in the “What do I need? If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.

As you weigh the pros and cons, keep in mind that timing is critical.

Like the federal government, private companies offer the option to consolidate multiple student loans into one.