Consolidating private loans into federal loans

If your life circumstances are changing, you may want to adapt your loan repayment plan to match.

For instance, if you’re on a ten-year repayment plan with your original loans, consolidation could get you an extension or offer the income-contingent payback plan.

Initially, these rates may be lower than the interest on fixed-rate loans. If you plan to pay off loans quickly when interest rates are low, a variable rate’s a good option.

Maybe you’re in a contract position with an end date, on track to a better-paying job, or planning to stay home with a child.Private student loans base interest rates on your credit score. All consolidation paperwork must be processed and approved in those six months for the in-school rate.This means if you’ve had a jump in your credit rating, you may be in a good position to consolidate private loans. Read more: Learn how to check your credit report and score, absolutely free There’s a window of time, after you graduate but before your grace period ends, when you can still get the lower in-school interest rate. And once the consolidation goes through, you enter repayment – even if you’re still in the grace period.Refinancing is the process of taking out a new private student loan to pay off and combine multiple private and/or federal loans.Refinancing may give you more options to reduce your monthly payment and interest rate, but refinancing federal loans can eliminate some of the benefits of federal loans.

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