Federal student loans consolidating again

In fact, old Federal student loans (under the prior Federal Family Education Loan [FFEL] program) can even be consolidated into new Federal loans eligible for (more) flexible repayment and potential forgiveness, under the Federal Direct Consolidation Loan program.

Unfortunately, though, students who refinance old (or new) Federal student loans a private loan lose access to all of the flexible repayment and potential forgiveness programs.

In the process of consolidation, each original loan is paid in full and a new Direct Consolidation Loan is originated for the combined balance of the consolidated loans.

ED determines the interest rate of the Direct Consolidation Loan by taking the weighted average of the interest rates on your existing loans and rounding up to the nearest 1/8 of a percent (0.125).

But flexible Federal student loan repayment programs are only available to student loans.Note: A student’s consolidation cannot include a PLUS loan taken out by a parent to pay for that student’s education.Your second step is to estimate what your monthly payment and total loan cost would be if you consolidated those loans, then compare it to the current amounts.By definition, consolidation means combining many loans into one single loan.After consolidating, you have only one interest rate and make only one monthly payment, instead of having multiple rates and payments.Originally founded in 1972 as a government sponsored agency, Sallie Mae began privatization in 1997.


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