1. What you owe: Borrowers need to understand more than just their loan balance. They also need to know what type of loans they have. The National Student Loan Data System gives students a rundown of each federal loan by type and date disbursed. Most borrowers have a mix of subsidized and unsubsidized Stafford loans. Interest rates on these varied over the years, so check with your loan servicer – the one who sends the statements each month – to find out the rate on each loan and whether it is fixed. The interest rate on a consolidation loan is based on the average rate of all loans being consolidated. If borrowers combine low interest rate loans with those that have a higher rate, they could wind up paying more interest over time, says Deanne Loonin, director of the Student Loan Borrower Assistance program at the National Consumer Law Center. It plays out different ways for different people, Loonin says. Some people, particularly if they have subsidized loans at different interest rates, their interest rate could go up if they put them all together. Borrowers should also know whether their loans are through the federal government or a private lender such as Chase or Wells Fargo. While private loans cannot be consolidated under a federal loan, private lenders may be more than happy to take over your federal loans. That doesnt make it a good idea, says Betsy Mayotte, director of compliance for American Student Assistance, a nonprofit that helps students manage college debt. Dont ever consolidate private loans with federal loans, Mayotte says. Never.
Posted on: Mon, 24 Mar 2014 21:49:05 +0000
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