Does consolidating student loans lower interest rate
Federal consolidation loans can only be used for federal student loans, but private consolidation loans can be used for both federal private student loans.Consolidation loans repay old loans with a brand new loan that has its own unique terms and conditions.
Only loans that are in repayment or in the grace period are eligible for consolidation, and a Direct Consolidation Loan must include at least one Direct or FFEL Program Loan.
Loans that have been in default can be consolidated after three consecutive monthly payments have been made or if the borrower agrees to repay the consolidation loans under an income-driven repayment plan (where the payments are based on the income of the borrower).
The interest rate is primarily determined by the lender’s evaluation of the borrower’s credit history.
However, some lenders also factor in the borrower’s current financial and professional circumstances.
The last section is dedicated to identifying the best private consolidation loans for those with a few different financial profiles.