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As the cost of higher education has skyrocketed, many Americans are having to borrow to go to college. If you have multiple student loans, you may want to know how to consolidate student loans. Is the consolidation of student loans beneficial?
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Amid fierce competition in the job market, demand for a college degree is skyrocketing, driving up the costs of a college education. As a result, many families cannot rely on savings or investments to pay their college bills, and more and more people are turning to student loans.
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Source: Saving for University
How to consolidate student loans
If you have a lot of student loans outstanding, managing their repayments can be a big challenge. Consolidating them might help. If you have multiple federal student loans, you can use the Direct Consolidation Loans program to combine your loans into one. The program is free and you can complete the consolidation process in 30 minutes.
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Those with private student loans can opt for loan refinancing, which involves arranging with a private lender to replace their various student loans with one loan. This type of arrangement allows you to consolidate federal and private student debt.
Is It Beneficial To Consolidate Student Loans?
One of the main advantages of loan consolidation is that it can simplify repayment, giving you only one monthly bill. Consolidating multiple loans into one can also give you more time to pay off debt, which can lower your monthly payment. However, if part of a loan has benefits for the borrower, you may lose those benefits when you consolidate the loan.
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Student loan consolidation rate
Student loans can carry either fixed or variable interest rates. You can combine the loans into one at fixed rate if you wish. With refinancing a student loan through a private lender, you can get a lower interest rate for consolidated debt if you have a good credit rating.
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Student loan consolidation calculator
You can use an online student loan consolidation calculator to see if consolidating your various student debt into one would help. The calculator can compare the monthly payment, interest rate, and total cost of your consolidated loan with those of your current loan. Some popular student loan consolidation calculators are Financial aid and Serious.
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How to get a student loan forgiveness
People receiving federal loans for education can qualify for a forgiveness after consolidating their debt. However, those who refinance their university loan through a private lender are not eligible for debt cancellation.
You must apply for a loan forgiveness. If your application is approved, you will no longer have to repay your student loans. Teachers in public schools and people working for a government or nonprofit organization can qualify for a student loan discount.
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