Cons of consolidating student loans

When you consolidate, you essentially take out a new loan that pays off all of your other loans.This makes life easier because you only have to make one payment to one servicer for your federal student loans.

Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance.So, for instance: If the average comes to 6.15%, your new interest rate will be 6.25%.Additionally, you’ll get a new loan term ranging from 10 to 30 years.Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.

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If you are going to consolidate, you should probably do it during your first year or two of repayment; otherwise, it might not be worth it.

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