Whether or not it’s the right move for you depends on your priorities.
Heather Mc Rae, a senior loan officer at Chicago Financial Services, said she encounters this question a lot, particularly when dealing with younger borrowers.
The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.
These processes are often confused, but they’re very different.
Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.
If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.
“My Equifax report says 10 of my 14 direct service school loans are over the limit.
I only started paying two months ago and am on time with full payment.
But unlike the federal government, they can consolidate both federal and private loans.