But, as Mark Kantrowitz warns on USA TODAY, “variable rates have nowhere to go but up.” If you sign up for that low, low rate now, you risk committing yourself to rising rates for years to come. Typical student loan repayment terms range from 5 to 20 years.By extending the repayment term, you can significantly reduce the amount of money you’re required to pay each month.When you start repaying those loans, tracking multiple lenders and payments each month might be a pain, but you can simplify things by consolidating or refinancing your student loans into one new loan.You may be able to consolidate your federal student loans, which involves combining most or all of your federal loans into one new Federal Direct Consolidation Loan.Chances are if you’re dealing with student loan debt, you’re not just dealing with one loan. And if you couldn’t cover the costs with federal loans, you very well may have turned to a private lender, such as a bank or other lending institution (e.g., Sallie Mae) to fund the rest of your expenses.One option you have when you begin tackling your student loan debt is to explore loan consolidation.While federal student loans are fixed-rate, private loans can be either fixed-rate or variable.
Many people pay hundreds of dollars each month on college loan repayments.
Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender.
You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.
There are both benefits and drawbacks to consolidating your loans, which we’ll discuss in this article.
Choosing to consolidate your loans is an individual choice and the right decision will depend on the specifics of your loans — the types of loans, interest rates, balances, borrower benefits, and more — as well as your current financial situation.