In such instances, it may be worth it to consider a student loan debt consolidation loan (a mouthful isn’t it?
)It seems like a roundabout way to go about paying your debt: I mean, you are taking out a new loan to pay off another loan. The reality is that, if you are currently having trouble keeping up with payments or digging yourself out of debt quicker, a debt consolidation loan may be just the solution for you. Student loan consolidation is the process of combining your Federal student loans into one single loan.
Because remember, student loan consolidation is about convenience in paying multiple loans – nothing else.
Your new consolidation loan gives you choices in repayment plans – you could switch to an income-based repayment plan, or the extended plan.
These small factors are what people forget when consolidating their student loans, and it could end up costing them more.
Student loan consolidation is different from student loan refinancing, but many people use the terms interchangeably.
If you switch to any other repayment plan, you will end up paying more over the life of the loan.
However, that could be worthwhile if you simply can't afford your payment today and don't have a choice.
Immediately at consolidation, your new consolidation loan will be essentially equal to the sum of all your existing loans.
Your interest rate will be the weighted average of all the loans you consolidated (rounded up to the nearest 1/8 percent), and your payment should also equal the sum of all your individual payments.
And if you miss one, you could end up harming your credit score.