Consolidating student loans interest
So, for a simplified example, if you have two loans, one for ,000 at 4% interest and one for ,000 at 6%, your consolidated loan will have a ,000 balance and a 4.7% interest rate.
By combining your interest rates, you also lose the ability to employ a favorite tactic of financial planners for paying down debt: targeting the most expensive debt, the loan with the highest interest rate, first.
In that instance you’re essentially finding a private lender that will refinance your private loans.
If you have private debt and you’re offered a lower rate and better terms through refinancing with a reputable lender, that’s worth pursuing.
Here are four things to consider before you make the leap.Consolidation also opens up the door to extended repayment plans, in which your term can stretch up to 30 years depending on how much debt you have.Consolidation doesn’t always work to your benefit, however.The cosigner doesn’t have to be a relative; he or she can be any adult who meets the eligibility requirements.Most borrowers will need a cosigner for this loan to meet credit, employment, and debt-to-income requirements.