Consolidating school loans rates

Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D.

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Federal consolidation loans have fixed interest rates.

The interest rates on federal consolidation loans are based on the weighted average of the interest rates of the federal education loans being consolidated, rounded up to the nearest one eighth of one percent.

Your new loan typically has a lower interest rate, saving you money, or a lower monthly payment, making repayment more manageable.

​We’ve created this guide to help borrowers better understand the emerging student loan refinancing and consolidation industry.

Before you consolidate, consider the following pros and cons: Note: Just remember, you must continue making payments after submitting your application until you receive notice from your servicer that underlying loans have been paid off.

You have the option to select the servicer of your choice (of which, Nelnet is an option) After your new Direct Consolidation Loan is complete, you may still add more eligible loans to your existing consolidation.

This can be attractive to borrowers because the consolidation frequently results in longer repayment periods and lower monthly payments.

When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans."The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you're consolidating," says Ken O'Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.

Consolidation provides grads with the ability to combine their student loans into one megaloan, but it comes with drawbacks.

Along with gaining a new degree, many graduates will also leave campus with new student loan payments they'll have to fit into their post-graduate budgets.

Here's the rundown you need to determine whether student loan refinancing and consolidation is right for you.

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