subject: Types Of Consolidation Loans [print this page] 1. Stafford loans - In case you have a Stafford loan that was issued after 2006, it carries a fixed rate of interest of 6.8%. In case your student loan was issued earlier, it carries a variable rate of interest. In fact, the alteration in variable rates is defined by the three-month Treasury bill yield in the preceding auction cycle.
This time, the yield faces very little change. That means if your target for loan consolidating is saving money in the interest payments, this is a bad year to make the call.
In case you want to consolidate to cut the monthly payments, the time might be optimal. While consolidating your student loans, you can decide to prolong the life of the loan that will lessen the total payment.
Surely, by changing the repayment term from, let's say, 5 years to 10, you will not only reduce the monthly loan payment by a third, though also doubling the interest expenses in the future.
A thirty-year loan is more interest costly. For instance, on $20,000 loans, refunded from 10-30 years, you will save about $100 on the monthly payment, though your interest expenses will almost quadruple. It means that you should think carefully prior to refunding and extending your loan life.
2. Perkins loans - These loans are the federal loans carrying fixed rates of interest. When it is workable to consolidate the Perkins loans or wrap them into a bigger loan consolidation package thus you make one single monthly payment on your federal students loans fiscal experts warn doing this may make you disqualified for the student loan forgiveness.
3. Private loans - Different from the Perkins and Stafford loans, private loans are not protected federally. Also, they tend to have higher rates of interest with the less favorable terms. So, many students choose federal student loans.
