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Posted by / 16-Nov-2019 15:08

Consolidating federal student loan rates

These include deferment — the ability to suspend payments under certain circumstances such as serving active military duty, attending further education or unemployment — and forebearance, which allows borrowers to postpone payments while still accruing interest, in cases of financial hardship.

Federal loan borrowers can also lower their monthly payments by extending the life of their loan, having their payments capped according to their income and by having their debt dismissed after making 25 years of consecutive payments under the income-based repayment plan.

The difference is you’ll need to apply through a private lender.

But borrower protections and repayment options on private consolidation loans can vary wildly from lender to lender.

Betsy Mayotte, director of regulatory compliance for the student debt assistance group, American Student Assistance, makes sure to tell borrowers to stay away from consolidation loans that combine federal and private loans.

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.

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Regardless of how the market fluctuates, borrowers will never pay more than 8.25 percent on their consolidation loans.

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