For multiple student loans, the secret is to convert to one single loan that is easy to track and pay every end of the month. They are usually 2 main options that are available. The first one is the federal consolidation. This is type of program availed to students by the government. Ones financial history is not used as the yardstick for the interest rates that will be availed to you. Instead, you will have the weighted average whereby the loans are combined into one large loan. This is what it means to consolidate loans.
The loan repayment period is longer than that of the private loans in the sense that you can have one that is running for up to 30 years. One drawback with this type of loan is that not all types of loans are eligible, which basically means that you will be limited with examples being the income driven ones though. But once you consolidate terms, then they become eligible. This seems not be so serious a drawback since all that you need to do is to consolidate.
The other option is to refinance you private loans. The first thing you will do is to consolidate loans and refinance. Since this is an option that is available to both the private and fedreal, you will find that this is a good option that you should seriously consider. The loan option is however driven by credit score since the lender will be looking at your loan balances to determine if they will buy your loans or not.
This basically means that if you have improved your credit score over time, you will receieve reduced rates of interest and vice versa.
Refinancing is a good thing since as we have seen above; it accepts both the federal and private ones. Once you consolidate loans though, the federal one ceases being federal and the benefit that came with it initially is lost.
Both of these options have their own merits and demerits. For instance, with the federal loans, the income-driven repayment becomes feasible. The downside is that you will lose all the benefits that come with the federal loans.Again, not everyone wants to have the private and federal loans as one. Keeping separate is the only way to receive loan forgiveness.
In view of the above, to consolidate loans gives you an upper hand when it comes to the federal loans refinancing.
The access to the income-driven repaymements is one thing that you cannot take for granted. This is particularly made possible through consolidation. But this comes with a high price. You will end up paying high interest payments on the loans since once you consolidate, you will be offered longer periods of repayment.
The Perkins loan forgiveness is also lost the instant you consolidate your loans. This particularly happens when you use direct student loan consolidation. There is an escape route though: you will only need to keep it separate from your loans so that you only consolidate others.