By increasing your loan repayment period, you’ll have more payments to make and will end up paying more in interest.
There are no prepayment penalties with a Direct consolidation loan, so feel free to pay more when you have the extra cash — it’ll help you save on interest. According to the Education Department, federal loans eligible for a Direct consolidation loan include: Subsidized and unsubsidized Direct loans, subsidized and unsubsidized Stafford loans, Direct PLUS loans, PLUS loans from the Federal Family Education Loan (FFEL) Program, Supplemental Loans for Students (SLS), Perkins loans, Health Education Assistance Loans (HEAL), federal nursing loans and some existing consolidation loans.
It also may lower your monthly payments by giving you as long as 30 years to repay.
While consolidating federal student loans may give you a much-needed break on your monthly student loan payments, that lower monthly payment amount comes with a price.
That means you’ll want to review your credit before going into this process.
(You can get a free credit report summary from to get an idea of how strong your credit is — or isn’t.) “The important thing is that private lenders will risk-score everyone who applies for one of these loans,” says Chou.
You can see how your student loans factor into your credit standing by getting Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser.
Unlike federal student loan consolidation, which doesn’t require a good credit history, a credit check will most certainly be part of the application process here.Dash echoed a similar profile for Credible as well.If you have fallen behind on your private student loans, consolidation isn’t going to be an option.Nor will it help if you are unemployed or barely squeaking by on a low income.If that’s the situation you find yourself in, you may want to instead talk with a nonprofit credit counseling agency that also offers student loan counseling.