Government help consolidating student loans

28-Jun-2020 12:24

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Some debt relief companies and lenders offer to consolidate federal and private loans together into one new loan to lower your monthly payments or interest rate. Consolidating private and federal loans turns it into a private loan, which means you will lose the federal repayment benefits and protections of your federal loans, such as deferment and forbearance, income-based repayment plans, and loan forgiveness.

Before you consolidate your loans, find out what it could mean for your specific situation.

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Consolidation has important pros and cons to consider, especially since once your loans are combined into a Direct Consolidation Loan, they cannot be separated.And some of the companies that promise student loan debt relief are scams.It’s illegal for companies to charge you before they help you.In addition, many states and colleges use your FAFSA data to determine your eligibility for state and school aid.

Some private financial aid providers may use your FAFSA information to determine whether you qualify for their aid. When you fill out your FASFA, you will also create an FSA ID.

If some or all of your loans have variable interest rates, when you consolidate into a fixed loan may affect the interest rate of your loan.