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Consolidating government school loans

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You can consolidate all, just some, or even just one of your student loans.Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.

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Consolidating federal loans may cause you to forfeit other benefits.WARNING: It is very dangerous to consolidate federal loans into a private consolidation loan.You will lose your rights under the federal loan programs once you choose to consolidate with a private lender.There are numerous problems that can arise–for example, if one of the divorced ex-spouses wants to apply for IBR.The Department says that borrowers with joint consolidation loans may repay under the IBR/PAYE plan as long as both spouses qualify with partial financial hardships.Federal loan consolidation will not lower your interest rate.

In fact, for some borrowers, your interest rate might go up slightly, since your weighted-average interest rate gets rounded up to the nearest eighth of a percent.

APPLYING FOR DIRECT LOAN CONSOLIDATION All borrowers must now apply for Direct Loan consolidation using the web site. It is very important to review this sheet and check to make sure all of the loans you wanted to consolidate are included in the new consolidation loan.

(Click espanol to find a Spanish version of the on-line application). Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward.

Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.

Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.

Borrowers in default may also consolidate in certain circumstances.