If you have outstanding student loans, you probably know that there are two different loan types: federal and private.
Generally, federal loans are easier to handle because the rules are the same across the board. The interest rate is capped and consolidation is pretty standard.
Private loans tend to be a bit variable and subject to the rules of the lender.
Refinance consolidation loans for your private student loans can help you get a better deal on the loans you have waiting to be paid off. If you are thinking about refinance consolidation, you should review the following questions.
Can I combine my private and federal loans?
Can you? Yes. Should you? No. You should always consolidate these types of loans separately because you would lose federal benefits on your loans. When you consolidate federal loans you have the benefits of deferment and forbearance which means you can delay repaying the loans if you are enrolled in a subsequent education program or have financial hardship.
What are the interest rates like on Since private loans do not qualify for federal regulation, you never know what to expect in terms of interest rates. There is no cap so the lenders can place any rate they like on consolidation. You can, however, get a lower rate by having a cosigner or shopping around to get a really good deal.
What is the best way to do a refinance consolidation?
Many borrowers prefer a home equity refinance consolidation loan. This is like a second mortgage. You can get a really low rate, extended term and low payments because your loan is secured against your home. The down side is that you can lose your home should you default on your loan.
Any advice?
You should do a refinance consolidation on your federal loans first. Usually, federal loans make up the bulk of student aid loans and private loans are supplemental. You should handle your bigger debt first to make sure you get a good deal and save yourself thousands of dollars.
