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Posted by / 21-Aug-2020 19:19

Consolidating government subsidized student loans

(Prior to July 1, 2012, graduate-level students were eligible for up to ,500 a year in Direct Subsidized Loans.) The interest rates on Direct Subsidized Loans are fixed and do not change over the life of the loan.The interest rate for the 2017-2018 academic year is 4.45%. Carefully consider whether loan consolidation is the best option for you. If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with one of the U. Department of Education’s (ED's) consolidation servicers. To apply for a Direct Consolidation Loan, you must follow the process outlined below.Remember, when you consolidate debt—any debt, including consolidating school loans—you take on a new loan that’s used to pay off the previous loans, replacing them.The new loan will be taken out at then-prevailing interest rates, so it may be at a better rate than the older loans; also, when you take out the consolidating loan, you can often borrow for a longer time period, stretching out repayment and therefore lowering your monthly obligation.

You also should consider the impact of losing any borrower benefits offered with the original loans.

That guarantee is why lenders will lend at better rates, and to people who are worse credit risks, than they otherwise would.

Some federal loans are also subsidized: the federal government will pay interest charges while the borrower is in school and for 6 months after graduation, or during any valid deferment or forbearance (i.e. Typically only available to lower-income borrowers, these loans can greatly reduce the cost of a college or university education.

Borrowers can be overwhelmed by their school loans.

When they are, one option is to consolidate the loans—to replace a number of different loans with a single one at a lower interest rate and/or monthly payment.

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Yet despite the appeal -- and its popularity -- student loan consolidation isn't for everyone.