There are many good reasons to consolidate your student loans. However,
there are other factors that borrowers will need to consider before making
their decision.
First, on the positive side. You’ll simplify your life with one monthly payment
that will come from one lender (and one point of contact if you have
any questions). Because you are extending your loan’s term (or how many
years it’s going to take to pay back your consolidated loans), your monthly
payment will be lower. That’s where the term “payment relief” comes from.
Loan terms range anywhere from 10 years all the way up to 30 years. And
the interest rate on a federal consolidation loan is fixed—which is unlike
variable interest rate loans that can change. Your consolidated loan’s interest
rate will be equal to the average of all the student loans you want to consolidate,
which is then rounded up to the nearest 1/8 percent. The maximum
rate your loan can be is 8.25 percent.
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