Consolidating student loans direct lending
Not only do you get one monthly payment and (in some cases) a lower interest rate, but you will also continue to be eligible for benefits that apply to federal student loan borrowers, such as public service loan forgiveness and alternative repayment plans. In fact, private student loans are not eligible for consolidation through the Federal Direct Loan Consolidation Program at all. Two ways to do this are through a home equity loan (for homeowners only) or through education lenders.Before signing on the dotted line, be sure to evaluate any fees, whether or not the interest rate is fixed, and whether the lender charges prepayment penalties.For example, many graduates have asked us how student loan consolidation works.While consolidating student loans is not the right choice for everyone, it can be a real help to some.Go to Fin Aid for a list of education lenders – but remember that for federal loans you will likely get the best rates and benefits by going through the Federal Direct Loan Consolidation Program.In the past, students could obtain Federal Family Education Loans (FFEL), which were actually provided by private lenders and guaranteed by the federal government.
With so much information out there, it may be difficult to figure out your best course of action.If you’re not worried about rising interest rates, for example, then you might not care about getting a fixed rate.Likewise, if you’re making your payments without any difficulty, you might have no need for lower payments.These loans are no longer provided, although existing FFEL loans can still be consolidated under the Federal Direct Loan Program.
This is the only case in which a “private” loan can be consolidated with a federal loan (since they are in fact guaranteed by the federal government).
This is available to students who have Direct Loans or Federal Family Education Loans.