Pros cons consolidating federal loans
With Parent PLUS Loan rates at 6.84% for the 2015-2016 school year, private lenders are offering competitive rates to borrowers who meet their credit requirements.
As a result, parents with strong credit may qualify for a better rate with a private consolidation loan.
Student loan debt keeps rising, and according to the latest findings, the Class of 2016 left school with an average of ,172 in debt, up 6% from the year before.
Another way a refinancing saves you money is because it can extend the duration of your loan.
If you choose to refinance your 10-year student loan into a 20-year loan, you will see a dramatic cut in your monthly payments.
When you apply for loan refinancing with a private lender, the private lender is essentially consolidating and refinancing your student loans.
Whereas when you consolidate your federal loans with a Direct Consolidation Loan, this only combines your federal loans together without reducing your interest payment.
If your current loan has a grace period still intact, wait until that period is over before starting the refinance option.
When you refinance your loan, you can choose how long you want your loan, as well as if you want a fixed or variable rate.
If you are refinancing to lower your interest rate, then you will be saving money.
However, if you are refinancing the loan to obtain a longer loan, then be aware that while your monthly payments decrease, the amount of money you pay for the entire loan increases.
Student refinancing is an excellent option for individuals with high-interest private loans.