Consolidating student loans lower interest rate

04-Sep-2019 22:30 by 7 Comments

Consolidating student loans lower interest rate

It also means if you’re a new grad with little credit history, you might need a co-signer to be eligible.If a co-signer is necessary, O’Connor says borrowers should ask if there’s a co-signer release option after a certain period of time.

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Borrowers should have loan account numbers, estimated payoff dates and contact information for each of their loans’ holders ready.

“With (our student loan program), if the borrower makes 12 months of on-time principal and interest payments, they can request to release the co-signer,” he says.

“That creates tremendous flexibility, especially for families applying for loans for multiple kids.” Students consolidating federal loans can do so through the Department of Education’s website at Loan gov, by phone at (800) 557-7392 or by downloading a paper application at Loan gov/borrower/and mailing it in.

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.

While loan consolidation can sometimes dramatically lower a borrower’s monthly payments, Kevin Walker, co-founder of the college finance site Simple Tuition.com, says it can also cost you.

“The downside of getting a lower monthly payment is that you’re going to subject yourself to substantially more interest charges over the life of the loan,” he says.Private lenders require borrowers to pass a credit check to get the best rates.That means if your score isn’t superhigh, you could wind up paying more if you consolidate.“If the terms you’re going to get are the not as generous as the terms you already have, consolidation is probably not a good idea,” she says.Regardless of whether consolidating federal or private loans, there is a catch.Know that you might need a higher credit score if you want the best rates without a co-signer.