Does consolidating student loans lower interest rate
Answer the questions below to see if consolidating or refinancing your student loans is a better option for you.
However, our team also researched other institutions and found some good alternatives for people that want to consider all options before they begin the process of refinancing or consolidating student loans. If you’re concerned about lowering your monthly loan payments, consolidation could be a good option for you.If you can lower your interest rates, more of your money can be used to reduce your debt, instead of paying off only your interest.Refinancing doesn’t guarantee lower payments, but it could help you get a lower interest rate and enable you to pay off your loan faster.If you have federal student loans and a) have too many different payments to keep track off or b) would like to qualify for different repayment plans like income-driven repayment or Public Service Loan Forgiveness, consolidation might be a good idea!Consolidating your federal loans will give you the opportunity to consolidate multiple loans into one (lower) monthly payment, and also let you choose a new repayment term and repayment plan.This is because federal student loans typically have fixed interest rates, which means your rate will remain the same over the life of your loan.
Private student loans usually have variable interest rates, which can change depending on economic conditions.
Variable rates can either work for you or against you.
During tough economic times, the Federal Reserve and other central banks can lower interest rates.
Refinancing your loans can lower your interest rate and your monthly payment.
Federal loan consolidation can lower your monthly payment if you extend your loan term, but stretching out payments over a longer time period without an interest rate reduction can increase overall repayment costs.
While a lower interest rate is good news, your new loan may not come with all the borrower benefits associated with government loans.