Re consolidating student loans
So if you have a lower credit score, you might be looking at a higher interest rate.
If you’ve just left school, you probably haven’t had the chance to build up a good credit history yet, so with private consolidation you might get a simpler, lower monthly payment, but you could end up paying more in combined interest.
Fifteen thousand dollars in subsidized loans at a three point five percent interest rate, and then two different unsubsidized loans: a loan of twenty thousand dollars with a four percent interest rate, and a loan of fifteen thousand dollars with a five percent interest rate.
Now as you can see, keeping track of these loans might get complicated— especially if you’re making payments to different loan servicers.
You'll still be paying interest, but without the tax break.
Of course, you can access these government programs for any future student loans (if you've paid off your student loans in the meantime).
So while loan consolidation can make your monthly payments simpler if you have multiple loans with different interest rates, you could end up paying a lot more if you extend your repayment period.But if you do decide to consolidate your loans, it's good to keep in mind that you always have the option of paying more than your monthly payment which can save you money over time, while still having the flexibility of not having to make the higher monthly payments that you would have on a standard ten-year plan. If you're struggling to make payments on your original loans, you might consider repayment options other than loan consolidation, like an income-based repayment plan.Or if you run into a financial hardship and need short-term relief, you might consider deferment or forbearance.But you can't get help with the ones you consolidate.This same caution applies to any advice to turn government loans into bank loans.