Consolidating a federal student loan
After making payments on income-driven plans for 20 to 25 years, any remaining loan balance may be forgiven.If you’re choosing the standard or graduated plans, your repayment term will depend on the total balance of the loans you’re consolidating, plus the balance of other loans you listed.By contrast, federal loan consolidation won’t change how much interest accrues, and eligibility doesn’t depend on your creditworthiness. You can consolidate your federal student loans and refinance your private loans, or consolidate some of your federal loans and refinance others.Or, you may research your options and determine you shouldn’t use either.With private student loan consolidation, a private lender repays your student loans, which may include private and federal loans.The lender issues a new loan based on your creditworthiness.You have the option of listing loans that you don’t want to consolidate but that you want factored into your total loan balance. You can choose among Great Lakes Higher Education Corporation & Affiliates, Navient, Nelnet or Fed Loan Servicing.Your total loan balance will impact your Direct Consolidation Loan’s repayment period and monthly payment. If you plan to use the Public Service Loan Forgiveness program, you have to choose Fed Loan Servicing, as it manages the program. When you consolidate your loans, you may be able to choose the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan or Income-Contingent Repayment Plan.
This is because you’ll finance the new student loan based on a variety of factors, including your income, debts, employment and credit.If you extend your loan terms, you will have a lower monthly payment.