Benefits of consolidating school loans

Undergraduates who take out federal loans during the 2015-16 school year will pay 4.29% in interest on those balances.

Private loan interest rates can be twice or three times as much, depending on your credit score or that of your co-signer.

Consolidation makes some loans eligible for Public Service Loan Forgiveness and income-driven repayment plans.

It’s also one of three structured ways to get out of default.

While private lenders don’t have as much power as the federal government does to recover the money you owe, missing a payment will severely affect your credit.

That will make it harder for you to take out other loans or even get an apartment in the future.

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If you have multiple federal loans — perhaps you’re even paying separate bills to different loan servicers — you can easily consolidate your student loans into one payment.

Some lenders will lower your interest rate or let you pay only the interest for a period of time, but not all.

Students who need greater financial assistance to pay for school qualify for federal subsidized loans.

However, many financial aid applicants will have short credit histories and low credit scores, if they have scores at all.

Federal loans, on the other hand, are available to any enrolled undergraduate with financial need.

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