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Like the federal government, private companies offer the option to consolidate multiple student loans into one.
The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.
Not everyone is a good candidate for private student loan refinancing.
Check out this blog post that provide more information: When to Consolidate Federal and Private Loans by Refinancing.The interest rates on Direct Consolidation Loans are based on this calculation: The weighted average of the interest rates of the federal student loans being consolidated, rounded up to the nearest 1/8th of one percent. The following example shows how the calculation is made.Current federal loan balances: The interest rate on the Direct Consolidation Loan would be: (,000 x 3.4%) (,500 x 6.8%) (10,000 x 6.8%) ÷ (,000 ,500 ,000) = 6.04% This would be rounded up to the nearest 1/8th of one percent, or 6.13%.But it’s only for federal loans, and it won’t cut your interest rate.Consider federal consolidation if you: If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.