Consolidating both private and federal student loans can be a very excellent decision. Having some these advances can prove to be detrimental to your finances. The interest rates which these loans carry can at times be very steep running to the upwards of 6%.
As such, consolidating them will allow you to access much more affordable interest rates. This will, in the long run, save you a lot of cash. Generally speaking, there are two ways of how to consolidate my student loan currently. These are through private consolidation companies or the federal student loans consolidation program.
Private student loan consolidation
There are numerous companies that offer these services. As this business is relatively new, most of its operators aren’t household names. The leading lenders of this kind include SoFi., CommonBond, DRB, LendKey to mention but a few.
Quite a large number of these firms demand no fee at all for student loans consolidation. Each of them also offers distinctive programs that come with varying benefits. It is, hence, wise to compare several of them to arrive at the one which best suits your needs and preferences.
Advantages of private student loans consolidation
The main benefits of opting for these services is you can save a sizeable sum of money on the interest rates you pay. Consolidation of your student loans via these lenders permits to greatly reduce your rates, thereby saving thousands of dollars over the duration of your loan. Some of these private companies demand interest rates, which are lower than 2% for highly qualified applicants.
The exact rates you will be able to obtain can be determined by your credit score, the loan duration, and the interest rates type. Speaking of interest rates types, there are usually two main options, which are the variable and fixed varieties. The fist is offered at significantly low rates such as 1.50%. While fixed interest rates are consistent throughout the loan duration.
Federal student loan consolidation
Alternatively, you can decide to consolidate your student loans into the department of education’s direct consolidation program. This federal program has been established to assist borrowers to obtain effective control of their debt. While also making repayment easier and convenient.
In this way of how to consolidate my student loan, you will have only a single monthly repayment and a new interest rate. This rate will be a weighted average of your past interest rates.
However, it is important to note that you won’t be able to save plenty of money through this program. Essentially, your overall loan cost and interest rate will remain virtually the same. You also cannot consolidate private student loans through this program.