Rules for consolidating student loand
Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D.C."That new loan will have its own interest rate; it will have its own repayment terms; it will have its own terms and conditions," she says.Even if your rates seem high, t he Department of Education puts a cap on consolidation loan rates at 8.25 percent.
Along with gaining a new degree, many graduates will also leave campus with new student loan payments they'll have to fit into their post-graduate budgets.Some differences include repayment plans, borrower benefits (for example, an interest rate reduction for making on-time payments), loan forgiveness programs, and interest rates.The primary difference between the two loan programs is that the Department of Education originates loans under the FDLP and private lending institutions originated loans under the FFELP.Default can have several immediate negative consequences and a long-lasting negative effect on your financial future.If your monthly payments are more than your current financial situation will permit, help is available.
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This can be attractive to borrowers because the consolidation frequently results in longer repayment periods and lower monthly payments.