There are special considerations that must be taken into account when consolidating federal student loans. Specifically, they have to do with subsidized and unsubsidized loans.
You know that federal loans generally have lower interest rates than private ones. Federal interest rates are also capped, whereas private loans are not. What you need to determine before choosing a consolidation plan is if it is even in your best interests to refinance your federal financial aid.
Unsubsidized student loans usually carry with them a higher interest rate than subsidized loans. Consolidating the two together is only beneficial if it will lower your interest overall. Depending on the rate you can consolidate at, you might be better off keeping the two types of loans separate.
If you have trouble keeping them separate and making both monthly payments, there are alternative payment plans that will reduce your monthly bills. Use an online consolidation calculator to see what your best option is. You want to make sure that your subsidized student loans and unsubsidized both work in your favor. Sometimes that means keeping them separate.
|Jennifer Mathes, Ph.D.|