What type of student loans can I consolidate, and what are the benefits of consolidation?
Here is a list of loans that can be consolidated.
Direct Subsidized and Unsubsidized Loans
Federal Subsidized and Unsubsidized Stafford Loans
Direct PLUS Loans and Federal PLUS Loans
Direct Consolidation Loans and Federal Consolidation Loans
Guaranteed Student Loans
Federal Insured Student Loans
Supplemental Loans for Students
Auxiliary Loans to Assist Students
Federal Perkins Loans
National Direct Student Loans
National Defense Student Loans
Health Education Assistance Loans
Health Professions Student Loans
Loans for Disadvantaged Students
Nursing Student Loans
The following loans cannot be consolidated:
Loans made by a state or private lender and not guaranteed by the federal government
Primary Care Loans
Law Access Loans
Medical Assist Loans
PLATO Loans
Consolidation is a good tool if your monthly payments are not manageable or if you are tired of paying multiple bills per month. Additionally, if you want to qualify for the new public service loan forgiveness program, many loans like Perkins loans or PLUS loans must be consolidated to qualify.
However, if you are almost finished paying off your student loans, the hassle may not be worth it. By the time you consolidate, you could very well pay off the loans. Additionally, the interest rate for consolidation may not be advantageous. Consolidation currently offers a fixed interest rate of 8.25%, while many student loans have variable rates. If your variable rate is below the fixed rate, you should carefully weigh the benefits of consolidation against the higher interest cost.
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