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Consolidating school loans private loans

Department of Education in the form of Federal Direct subsidized and unsubsidized loans. Federal loan consolidation The U. To reduce the cost of borrowing, you can make additional payments without penalty.

Apply on your own You need to qualify for the consolidation loan on your own. Dept of Education allows students with multiple federal loans to consolidate these loans relatively easily. Simplify monthly payments You have the option to consolidate your federal and private student loans into one loan and monthly payment. If your private education loan has a variable interest rate, you might consider using a fixed rate home equity loan to pay off the private education loan, effectively locking in the interest rate. Private lenders have never been motivated to offer their customers loan consolidation at lower rates when they could keep them locked in at higher ones.

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You can also try talking to the current holder of your loans, to see if they'll reduce the interest rate on your loans rather than lose your loans to another lender. But that reality has changed now that credit unions have moved into the market. There may be additional fees charged for originating these loans. These are private consolidation programs, so the interest rates are dictated by the lender, not the government.

You should not consolidate your federal student loans together with your private education loans. If your repayment term is extended, it will take you longer to pay back your loan and you will increase your total loan cost.

One benefit of refinancing your student loan debt is that many lenders will give you the option to consolidate your federal loans with any private loans to have one, single payment. If your credit score has increased by points or more, you may be able to get a lower interest rate by consolidating your debt with another lender.

But that reality has changed now