Pros and cons of consolidating your student loans - Fox Business

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Weighing the pros and cons of student loan consolidation can help you decide if it’s the right move to make.  (Shutterstock)
When you have multiple student loans to manage, a monthly payment could easily slip through the cracks. Consolidating your student loans can help simplify your student loan repayment by giving you just one monthly payment to manage.
But consolidation means something different depending on whether you have federal student loans, private student loans, or a combination of the two.  
Before you consolidate your student debt, it’s important to consider the pros and cons of student loan consolidation.  
If you’re exploring your loan options, visit Credible to learn more about private student loan refinancing and see your prequalified rates.
Consolidation and refinancing are two terms that are sometimes used interchangeably. But when student debt is being discussed, consolidation typically applies to federal loans while refinancing applies to private student loans.
You can refinance both private and federal student loans, but you should be careful when making the decision to refinance federal loans into a private loan. You’ll lose federal benefits and protections like income-driven repayment plans, loan forgiveness options, deferment, and forbearance. 
If you’re working toward federal loan forgiveness or have unstable income, it could be better to stay with your federal student loans because they have more payment relief options to fall back on. Private lenders may offer some borrower benefits as well, but those benefits vary and may not be as expansive as federal loan benefits.
A federal Direct Consolidation Loan lets you consolidate multiple federal loans into a new, single loan. Direct Consolidation Loans come with several benefits to consider, including:
Consolidating your debt with a Direct Consolidation Loan has some downsides to consider as well, including: 
You can’t consolidate private student loans into a Direct Consolidation Loan. But private student loan refinancing (sometimes called a private student loan consolidation) is an option to make repayment more manageable. These are some pros of private student loan refinancing:
Credible makes it easy to compare private student loan refinance rates from multiple lenders. It only takes a few minutes, and it won’t affect your credit score.
Before refinancing student loans, consider some of the drawbacks:  
The application process will vary slightly depending on your lender, and whether you’re consolidating federal loans or refinancing private loans.
You can apply for a federal Direct Consolidation Loan by visiting StudentAid.gov. The application lets you choose the loans you want to consolidate and select repayment options. 
Your loan servicer will take care of the consolidation from there, and you should continue making payments on your old loans until you get confirmation that they’ve been paid off.
To refinance your student loans, you need to shop around with private lenders to compare rates and submit an application. The application process will likely involve a credit check, and your interest rate will be set based on your credit history. 
Having good credit can help you land competitive interest rates and long-term savings. Shopping around and getting rate quotes can help you find the best loan you can qualify for based on your credit profile.
If refinancing your student loans is right for you, visit Credible to compare private student loan refinance rates from multiple lenders in minutes.
Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset. Powered and implemented by FactSet Digital SolutionsLegal Statement. Mutual Fund and ETF data provided by Refinitiv Lipper.
This material may not be published, broadcast, rewritten, or redistributed. ©2022 FOX News Network, LLC. All rights reserved. FAQNew Privacy Policy

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