You may even consolidate as a way to get out of student loan default, as long as you either make three on-time payments beforehand or choose an income-driven repayment plan. Flexible repayment options: Federal student loan borrowers can choose among several repayment programs.
The standard payback period is 10 years, but there are other programs, called income-driven repayment plans, that tie loan bills to income.
Here's how to decide whether refinancing or consolidating your student loans could make your finances more manageable.
Refinancing is credit-based, meaning your credit score is a primary factor in whether you qualify and the new interest rate you'll receive.
The lender will also take your income and current debt-to-income ratio into account.
Certain public service workers may qualify for loan forgiveness in just 10 years, tax-free.
Extending your payback period can be tempting, since it will reduce your monthly payment.
Total student loan debt currently stands at about $1.5 trillion, according to the Federal Reserve, and it affects how borrowers can save, spend and set goals.
A recent Federal Reserve report found that 20 percent of the drop in homeownership among 24- to 32-year-olds between 20 was due to an increase in student loan debt.Federal student loan consolidation is, as it sounds, available only for federal loans, or those the government makes.You do not need to meet credit requirements to consolidate federal loans, and after consolidating you'll pay a single bill to your student loan servicer, the company that accepts payments on behalf of the government. Your new interest rate will be a weighted average of your previous loans' rates, rounded up to the next one-eighth of 1 percent.Refinancing and consolidation are two ways to bundle multiple student loan payments into one—and in the case of refinancing, potentially save money on interest.Whether to go for one of these options, though, depends on the type of loans you have and how much you stand to save.While it sounds morbid, federal loans are also forgiven if the borrower dies.