One of the biggest myths when it comes to student loans is whether you can combine your Federal and private student loans. Well, since the middle of 2014, you can actually refinance and consolidate both your Federal and private student loans into a single loan with many private lenders.
According to Student Aid.gov, the following types of student loans are eligible for consolidation: • Direct Subsidized Loans • Direct Unsubsidized Loans • Subsidized Federal Stafford Loans • Unsubsidized Federal Stafford Loans • Direct PLUS Loans • PLUS Loans from the FFEL Program • Supplemental Loans for Students (SLS) • Federal Perkins Loans • Federal Nursing Loans • Health Education Assistance Loans • Some previous consolidation loans When you consolidate your Federal student loans, you will get a new loan through the Department of Education, which you can then setup a repayment plan that works for you.
The interest rate will also be fixed at the current Federal Direct loan rate.
You are eligible for any “Direct” repayment plan – and you can setup a timeline from 10 to 30 years to pay back the loan.
This is one of the best ways to lower your current payment on your Federal student loans.
If you want to combine your private student loans together into one payment, you have to refinance your student loans.
The process is very similar to Federal loan consolidation, but it is done through a bank rather than the Department of Education.
The benefits of refinancing your private student loans are typically two-fold.
Having multiple loans can be tough to manage – different amounts due, different payment due dates, and a lot more statements to keep track of.
By combining your loans into a single loan, you can have one single bill, and you may even be able to lower your payments.
When you consolidate your Federal student loans, you go through the Direct Consolidation Loan program.
This program is designed specifically for Federal student loans and is administered by the Department of Education.