Consolidating student loans and private loans
However, several banks and services do allow you to combine your private and Federal loans into one payment.
Depending on your post-graduation experience, it may make a lot more sense to combine your loans together.
If you want to combine your Federal and private student loans together, you have to do it through a private lender.
The Federal Direct Consolidation Loan program does not consolidate private loans into Federal loans.
On the other hand, if you are taking advantage of benefits of your Federal student loan, such as income-based repayment plans or forgiveness plans, you should not consolidate your Federal student loans into your private student loans.
Your Federal benefits will disappear if you do this, and you’ll end up owing the full balance of your loan over time.
The interest rate will also be fixed at the current Federal Direct loan rate.
For example, a ,000 Federal student loan at 6.8% will cost a borrower ,619 to repay – ,619 in interest.
By contrast, if that student refinanced into a private student loan, they could significantly lower their interest rate and monthly payments.
You are eligible for any “Direct” repayment plan – and you can setup a timeline from 10 to 30 years to pay back the loan.
This is one of the best ways to lower your current payment on your Federal student loans.
In order to get control of what can be four to eight years of loans depending on the degrees sought, many graduates will pursue Consolidation for their Private Student Loans.