Consolidating subsidized and unsubsidized stafford loans
At first glance, variable rates may look appealingly low — 2.25 percent or 3.25 percent — compared to fixed-rate loans that ask for 6–7 percent interest.But, as Mark Kantrowitz warns on USA TODAY, “variable rates have nowhere to go but up.” If you sign up for that low, low rate now, you risk committing yourself to rising rates for years to come. Typical student loan repayment terms range from 5 to 20 years.Change your variable interest rate loan to a fixed-rate loan.While federal student loans are fixed-rate, private loans can be either fixed-rate or variable.When you complete your online application for the consolidated loan you can choose a payment that is income contingent and based on what you can really afford.Till your income increases, this is far more beneficial than missing payments.
If you’re on a tight budget, this can provide you with the extra breathing room you need to pursue other important financial goals, like building your emergency fund. Some consolidation plans offer flexible repayment terms.
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Some spend more money on college debt than they pay for groceries, utilities, or in some cases, even rent.
Perhaps that’s one reason around 7 million borrowers are in default, according to the Consumer Financial Protection Bureau. Consolidating your student loans can be a great way to ease financial strain — and the stress that goes with it. There are repercussions to refinancing that you should know before you sign on the dotted line.
You may have been wondering, “Should I consolidate my student loans? Here are a few of the benefits of consolidating your loans. This If rates have dropped since you originally borrowed your loans, or if your financial situation and credit score have improved, lowering your interest rate could save you a decent chunk of change — and may also allow you to pay your loans off faster.Just keep in mind that while your student loans may be forgiven after 20-25 years in an income contingent program, the balance will continue to increase and the forgiven debt may be taxable.