One of the biggest student loan myths out there is that borrowers can’t consolidate federal student loans and private student loans into one loan. It’s understandable why people think that, since this wasn’t an option for many years. But now that the choice is available, it’s important to understand whether federal and private loan consolidation is right for you especially when there’s the potential for significant cost savings on the line.
So Bruce Mesnekoff today tells us myth normally student have about student loan consolidation.
According to Bruce Mesnekoff there are Many Myths about Student Loan Consolidation in student minds, let’s discuss those.
1. Consolidation is the same as student loan refinancing?
Yes, Consolidation and refinancing are similar, but there are important distinctions. Please listen carefully,
“Consolidation” and “refinancing” used interchangeably, but they’re actually two distinct repayment options. Consolidation typically refers to bundling multiple federal loans into one through the federal government.
It can make your monthly payments simpler or give you access to more favorable repayment plans or forgiveness programs.
Student loan refinancing refers to taking out a new loan usually one with a lower interest rate to repay one or more existing loans.
2. The consolidation process is the same for both federal student loan and private student loans.
Big NO, Federal loan consolidation is different from private loan consolidation.
Federal loan consolidation is a government process, while private loan consolidation happens through private lenders. If you have both federal and private loans, you may want to consolidate your federal loans together and your private loans together, but it’s rarely advised to consolidate them all into one loan.
3. Consolidating student loans is a no-brainer.
According to Bruce Mesnekoff , Student loan consolidation isn’t right for everyone.
Federal student loan consolidation sounds great: You go from juggling multiple interest rates, terms and loan servicers to having one monthly payment. But consolidation isn’t for everyone, says Bruce Mesnekoff, Founder of The Student Loan Help Center.
Federal loan consolidation can be beneficial if you need to do it to access a repayment option. For example, most income-driven repayment plans and forgiveness programs require that borrowers have a federal direct loan.
Let’s wait for next episode release on our radio and we will discuss more myths with Bruce Mesnekoff about student loan consolidation as this is biggest issue in student’s life in Untied States.