There are so many choices to make when you take out student loans: big loan or small loan, federal or private, co-signer or no co-signer.
You’ve got just as many choices when it’s time to repay your loans.
[Skip to refinancing] This option is available only for federal student loans.
The government combines your separate loans into a direct consolidation loan, and it assigns you a 10- to 30-year repayment term based on your total balance.
Your interest rate is a weighted average of your previous rates, so it’s not determined by your financial history.
Certain loan types that aren’t otherwise eligible for loan forgiveness and income-driven repayment become eligible as a result of consolidation.
Access to income-driven repayment plans: If you’re having trouble affording your student loan bill, consider repaying your loans on an income-driven plan.
That means your payments will be tied to your earnings and your loan balance will be forgiven after 20 or 25 years.Only federal direct loans qualify, so consolidating certain other types of loans into a direct consolidation loan will let you repay them on one of these plans.Access to Public Service Loan Forgiveness: The same is true if you plan to apply for Public Service Loan Forgiveness.The program will dissolve your remaining federal loan balance after you make 120 payments while working in a public service job.But only direct loans qualify, so you can consolidate Federal Family Education Loans or Perkins loans into a direct consolidation loan to participate (read on for important caveats to consolidating Perkins loans).Potentially higher interest payments: Your new loan term could be longer than your individual loans’ repayment schedules.