Benefits of consolidating federal student loans
As part of the process, you’ll need to provide details about your existing federal student loans, and choose a federal loan servicer and repayment plan for your new consolidation loan.You have to complete the application in a single session, so do your research before you start.On the standard repayment plan for direct consolidation loans, you’ll make equal monthly payments for 10 to 30 years, depending on your total federal student loan balance.Alternatively, there are six other repayment plans to choose from, including four income-driven plans.Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance.You typically need a credit score at least in the mid-600s to qualify, and rates range from around 2% to more than 9%.Dealing with long-term debt can be difficult, but having a strategy and tools can help.Consolidating or refinancing student loans are two popular options that could help you manage your payments, save money and open up additional options for loan forgiveness and repayment.
You can opt out, but you’ll have to submit a copy of your most recent federal tax return directly to your loan servicer after you finish the consolidation application.
If you have Perkins loans, think twice before consolidating them; you’ll lose access to Perkins loan cancellation if you do.
Federal loan servicers are private companies that manage federal loans for the Department of Education.
Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors; click on the link below for more details.
[Back to top] Applying for consolidation takes most borrowers less than 30 minutes, according to the Federal Student Aid website.