Consolidating a federal student loan

Here's the rundown you need to determine whether student loan refinancing and consolidation is right for you.First, what does consolidating student loans really mean?Even if your rates seem high, t he Department of Education puts a cap on consolidation loan rates at 8.25 percent.One major advantage of federal consolidation loans is that borrowers don't need a stellar credit score to qualify, they can apply any time (even if their loan is in default) at Loan gov, and they'll always get a fixed interest rate.For example, if the borrower rehabilitates the loan by making satisfactory repayment arrangements through his/her loan servicer, he/she may be eligible to consolidate the loans.

If you're consolidating with a private lender, consolidating your loans means combining and refinancing your loans into one new private loan.When even the basic term "consolidation" means different things for different lenders, the process can understandably seem daunting.But if you're looking to save thousands on student loan interest payments -- as well as time and headaches from managing multiple monthly payments -- then understanding the consolidation process is critical.If you're consolidating with the federal government, consolidating your loans means combining your multiple federal student loans into one new federal loan, called a Direct Consolidation Loan.You have some flexibility in picking your loan term, but you'll simply receive an interest rate that's a weighted average of your existing rates.

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Discounts reduce the amount of interest you pay over the life of the loan.

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