Why People Consolidate College Loans
Students with loans often consider the option to consolidate college loans which refers to merging all your loans into one balance, paying one interest rate, and owing only one lender.
A consolidated loan can also help you minimize your interest costs if interest rates are rising or are expected to rise while also streamlining your bill payments. It gives them some stability by locking into lower interest rates now if rates are going up.
With a consolidated loan, the resulting interest rate is a weighted average of your existing rates.
In general terms people often consolidate college loans when they expect that interest rates will not go lower in the imminent future and essentially bet that by consolidating their college loans, they'll minimize their interest payments over the life of the loan.
Student loan consolidation does not incur any additional fees for you either.
A good loan consolidator should be able to properly explain their services to you and to properly explain the benefits of how consolidating college loans can hopefully save you money each school year to give you more cash to spend on your other expenses.
If you have only one lender currently, you must consolidate with them but if you have several loans with different lenders, you can choose one who is approved by the Department of Education.
While consolidators have to charge you the same rate you should still compare options because some may offer benefits over others.
Under current rules, a US student can consolidate their student loans one time with a private lender.
If you choose to reconsolidate after that, it has to be with the Department of Education since student loans are guaranteed by the government.
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