Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D.C."That new loan will have its own interest rate; it will have its own repayment terms; it will have its own terms and conditions," she says. Consolidation provides grads with the ability to combine their student loans into one megaloan, but it comes with drawbacks. Along with gaining a new degree, many graduates will also leave campus with new student loan payments they'll have to fit into their post-graduate budgets.
But President Obama realizes that many students need relief sooner than that.
Even if your rates seem high, t he Department of Education puts a cap on consolidation loan rates at 8.25 percent.
One major advantage of federal consolidation loans is that borrowers don't need a stellar credit score to qualify, they can apply any time (even if their loan is in default) at Loan gov, and they'll always get a fixed interest rate.
Both federal and private lenders recognize that lower monthly payments help may be the best option, if you don’t get the job you want immediately after graduating from colleges.
Find out more about the choices debt consolidation offers.
President Obama has made historic investments in making college more affordable for millions of students.
But many people who took out loans to pay for their education are struggling to make monthly payments on those loans, making our tough economic times a little bit more challenging.
Unfortunately, our nation’s education system, politicians, and students haven’t figured out a solution.
We’ve created this guide to help borrowers better understand the emerging student loan refinancing and consolidation industry.
Before you consolidate, consider the following pros and cons: Note: Just remember, you must continue making payments after submitting your application until you receive notice from your servicer that underlying loans have been paid off.
You have the option to select the servicer of your choice (of which, Nelnet is an option) After your new Direct Consolidation Loan is complete, you may still add more eligible loans to your existing consolidation.