Consolidating federal student loan debt
If she were to consolidate those loans, a legitimate lender would calculate her new interest rate using the following formula: (,500 x 3.6%) (,500 x 6.8%) / (,500 ,500) = 5.68%. While the overall interest rate on the consolidated loan is less than the 6.8% Marisa was paying on the ,500 loan, it's significantly more than the 3.6% she was paying on the ,500 loan.
Before you consolidate your student loans, crunch the numbers.
Weigh that against the benefit of a lower interest rate, smaller monthly payments and having just one—not multiple—student loan payments to handle each month. Combining them with federal loans will disqualify you from applying for the benefits provided for federal student loans, such as to extending the loan-payment period , income-driven repayment plans, and federal loan forgiveness programs.If you graduate in four years, you will likely have four loans—even more, if you also took a private loan for additional funds.That's Loan consolidation can simply your life, but you need to do it carefully to avoid losing benefits you may currently have—or be eligible for—under the loans you have now.You can consolidate all federal student loans and most private student loans.The amount of money you are eligible to borrow depends on your college costs for a particular year.