Which Student Loans Should I Include in My Student Loan Consolidation?There are several different types of student loans that can be included in your student loan consolidation, but the question is, should they? The answer depends on whether or not your student loan is a fixed rate or a variable rate loan compared against the current variable rate set by the government. Variable Rate Student Loans & Student Loan ConsolidationSome student loans such as the Stafford Loan and the PLUS loan have variable interest rates. This means that the amount of interest you'll pay on these loans changes every July first when the federal government resets the rates. These student loans are generally always a good choice for refinancing as you can lock in to today's rate. This is especially important today as the interest rate on student loans is trending upward after a long period of favorable lows. Fixed Rate Student Loans & Student Loan ConsolidationOther student loans like the Perkins Loan are fixed rate loans. This means that the interest rate is already locked in, unlike variable rate loans. When considering whether or not student loan consolidation is right for these types of student loans, you'll want to compare your current interest rate with rate being offered by the lender. The student loan consolidation rate offered by the lender is dependant on the government's current interest rates. If your loan was written during a low interest rate period and today's rates are high, you may save money by keeping this loan out of the student loan consolidation. For many borrowers, having one low monthly payment is more important than saving a few hundred dollars over the course of 10 years. If your fixed rates are lower than the rates currently offered but your balance is fairly small, adding them to the student loan consolidation may be better suited for your cash flow situation. It never hurts to ask your lender what your payments would be if they were wrapped into the student loan consolidation. To find out what you could save through student loan consolidation, contact ScholarPoint today. |
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