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Getting Student Loan Debt Consolidation. If you are a high school graduate student and have just finished your education, and you are feeling financially over-loaded with financing your education, you may be considering options to lower your monthly student loan payments through private loan repayment plans or government student loan consolidation. However, before you decide which option to choose, it is important to understand how the interest rates for student loans work. While the interest rate is likely to be higher on government loans due to their large size, private student loans also have their own rates and terms. Depending on the type of loan and your specific financial circumstances, your repayment options will vary quite a bit.
Here are some things that you should keep in mind as you consider your student loan options.
Private Loan Interest
Private student loan interest rates are generally much higher than those associated with federal education loans. Student loan consolidation programs, also known as deferred repayment programs, are a great way to combine federal and private student loans into one single loan. Typically, the interest rates are much lower with deferred repayment programs than they are both private and federal loans. While you will have one monthly payment, usually at a much lower rate, you will make payments throughout the life of the loan, meaning that you never have to repay any of your loans until you are done with your education and find a job that allows you to qualify for the appropriate federal student loan. During your deferment period, interest is not charged off your federal education loans, so you will not accrue any interest and will never pay any up-front costs associated with your deferred repayment loan.
Federal Loan
If you have federal loans and want to use a private student loan to make college affordable, there are several options available. If your school has an administrative fee that can eat into your budget, you can consolidate your federal student loans into private ones, knowing that you will only have to make one monthly payment. Also, if you know that you will be attending school for an extended period of time, you can defer your payments until you finish your education. In many cases, federal loans are still the better choice, especially if you want to get some technical or higher education degrees that require an extensive amount of coursework that cannot be done on a part-time basis.
Here are some things that you should keep in mind as you consider your student loan options.
Private Loan Interest
Private student loan interest rates are generally much higher than those associated with federal education loans. Student loan consolidation programs, also known as deferred repayment programs, are a great way to combine federal and private student loans into one single loan. Typically, the interest rates are much lower with deferred repayment programs than they are both private and federal loans. While you will have one monthly payment, usually at a much lower rate, you will make payments throughout the life of the loan, meaning that you never have to repay any of your loans until you are done with your education and find a job that allows you to qualify for the appropriate federal student loan. During your deferment period, interest is not charged off your federal education loans, so you will not accrue any interest and will never pay any up-front costs associated with your deferred repayment loan.
Federal Loan
If you have federal loans and want to use a private student loan to make college affordable, there are several options available. If your school has an administrative fee that can eat into your budget, you can consolidate your federal student loans into private ones, knowing that you will only have to make one monthly payment. Also, if you know that you will be attending school for an extended period of time, you can defer your payments until you finish your education. In many cases, federal loans are still the better choice, especially if you want to get some technical or higher education degrees that require an extensive amount of coursework that cannot be done on a part-time basis.
