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.
That means the interest rate on your largest loan balance will have the biggest impact on your final rate. Consolidating federal loans comes with several unique benefits: No credit or income requirements: Anyone with federal student loans can get a consolidation loan.
You can apply for a federal direct consolidation loan for free online through the U. Your credit scores, income and other financial factors are not used to determine your eligibility, and you don't need a cosigner.
Federal student loan consolidation is, as it sounds, available only for federal loans, or those the government makes.
You do not need to meet credit requirements to consolidate federal loans, and after consolidating you'll pay a single bill to your student loan servicer, the company that accepts payments on behalf of the government. Your new interest rate will be a weighted average of your previous loans' rates, rounded up to the next one-eighth of 1 percent.
Total student loan debt currently stands at about $1.5 trillion, according to the Federal Reserve, and it affects how borrowers can save, spend and set goals.
A recent Federal Reserve report found that 20 percent of the drop in homeownership among 24- to 32-year-olds between 20 was due to an increase in student loan debt.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.Unlike federal student loan consolidation, refinancing is available for both federal and private student loans.A bank, credit union or online lender will pay off the loans you want to consolidate and issue you a new private student loan for the total balance.Refinancing and consolidation are two ways to bundle multiple student loan payments into one—and in the case of refinancing, potentially save money on interest.