Pros and cons of consolidating federal loans
To help ease the burden of student loan payments, many borrowers opt to consolidate or refinance their student loans.Both options have the potential to help you pay your student loans off quicker and pay less interest along the way, but there’s a lot of confusion around how they work, how they differ, and whether they’re right for you.
It’s hard enough to start a career or raise a family, and when a large chunk of your income is going toward student loans every month, it can feel downright impossible.Magnify Money is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers appear on our site.This compensation from our advertising partners may impact how and where products appear on the site (including for example, the order in which they appear).By the end of this post you will understand both options and have a good idea whether one, or both, are right for you.The terms student loan consolidation and student loan refinancing are often used interchangeably, but they actually mean two very different things, and they have very different sets of pros and cons.When I talk to people who are frustrated with their student loan debt and want to get rid of it as soon as possible, there’s one question that comes up over and over again: Should I consolidate my student loans?
It’s a tricky question both because there are a lot of variables to consider and because there’s a lot of misinformation out there about exactly what student loan consolidation is and how it can help you.
Let’s look at an example of getting a federal consolidation loan— FEDERAL CONSOLIDATION LOAN GOV you can also get a private consolidation loan PRIVATE CONSOLIDATION LOAN BANK if you have private loans, but we’ll get to that in a minute.
Let’s say you have fifty thousand dollars in federal loans.
Since student loans are such a hot topic, it pays to know more about the different types of loans available to students.
Starting with federal student loans, two different types of federal loans are available: subsidized and unsubsidized loans.
So my goal here is to correct that misinformation and show you exactly what student loan consolidation is and when it can help you.