| Private and Federal, the Differences | | | | second time, your interest rate remains the same. |
| There are different avenues to consolidate loans that | | | | What are the Benefits of Consolidation? |
| you have obtained as a student. You can opt for | | | | By combining all loans into a single one, the student |
| private consolidation or federal student loan | | | | need not deal with different lenders. Further, the |
| consolidation. If you opt for the latter, your existing | | | | interest rate shall change as per weighted average |
| debts shall be taken over and repaid by a debt | | | | calculations with reference to the current interest |
| consolidation company or by the Department Of | | | | rate. |
| Education itself. This depends on the type of Federal | | | | This transaction resembles a refinancing transaction |
| low interest loan that you have obtained. | | | | with the sole difference here that the interest rates |
| Interest Rates | | | | remain the same. Private lenders charge a high |
| Interest on such loans are charged at an annual rate | | | | interest rate on their loans. Consolidation services |
| ranging from at least 4.7% to not more than 8.25%. | | | | helps save money. This transaction improves the |
| This rate is applicable to Federal Stafford Loans. For | | | | credit score of the student. Your monthly outflow |
| Plus loans, the rate charged hovers around 9%. Given | | | | shall come down and dealing with a single lender will |
| below are some useful guidelines you can use to | | | | make it easy to keep track of loans. A few options |
| consolidate your student loan. | | | | available to students include Federal Stafford, Perkins, |
| Currently, you can consolidate you loan once with a | | | | Parent PLUS, Government Direct Credits, etc. |
| private institution. If you want to re-consolidate the | | | | Choosing the right services helps you save time. |
| loan, you have no choice but to choose the | | | | Further, the formalities are taken care of leaving you |
| Education Department. When you consolidate the | | | | free to focus on your studies. |