Student loans never go away and the failure to pay back your student loans can destroy your credit rating.
So what’s the answer?
A loan consolidation allows you to roll certain student loans into one new loan with a possible lower interest rate. But remember if your new consolidated loan has a longer repayment term, the total amount you repay may increase because of the added interest over time.
What’s the benefit of loan consolidation?
Loan consolidation generally allows you to get a lower monthly payment by combining several loans into one packaged loan and extending your payment program. Just think of it like you’re refinancing a mortgage loan. However, there are better options!
What are those better options?
Income based repayment plans are the better plan! While you may have to consolidate your loans (and you have to do so carefully), ultimately you want to get into an income based repayment (IBR) or income based repayment program (IBR).
These programs can cap your fair loan payments at a percentage of your income and forgive any remaining debt after 25 years of affordable payment.
Income contingent repayment plans (ICR) are available for direct student loans and the income sensitive repayment plan (ISR) are available for Federal loans.
You can learn more about why income based repayment plans might be better than loan consolidation by contacting Tampa Bay student loan attorney, Nancy Cavey. She can help you with your student loans regardless where you live in the United States. Cal her today at 727-828-9955.