Consolidating student loans with different interest rates dating old photographs uk
So, for a simplified example, if you have two loans, one for ,000 at 4% interest and one for ,000 at 6%, your consolidated loan will have a ,000 balance and a 4.7% interest rate.By combining your interest rates, you also lose the ability to employ a favorite tactic of financial planners for paying down debt: targeting the most expensive debt, the loan with the highest interest rate, first.But that doesn’t mean consolidation is always a smart move.Here are four things to consider before you make the leap.In that instance you’re essentially finding a private lender that will refinance your private loans.
That’s because Parent PLUS loans are not eligible for several types of income-driven repayment, and they carry that restriction with them in a consolidation, causing your student loans to lose those options, as well. Consolidation can affect your eligibility for forgiveness.
Once you leave the federal program, you can’t return and are no longer eligible for one of its income-driven repayment plans.
Private consolidation is a completely different story, though.
Consolidation also opens up the door to extended repayment plans, in which your term can stretch up to 30 years depending on how much debt you have.
Consolidation doesn’t always work to your benefit, however.