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Digital News Report – There can be benefits to consolidating student loan debt, including lower interest rates and a single payment. When you include your rent, mortgage, car loan, credit card debt and student loans, the figures can be daunting.
A recent report by the Department of Education (DOE) found that student loan defaults are on the rise. Credit scores are being hurt and borrowers may face garnishments and more, depending on the loan.
Here are some of the benefits to consolidating loan debt:
1) Lower monthly payments
2) Simplified bill paying
3) No pre-payment penalties
4) You may not need cosigners
5) You may still be able to deduct your interest payments
There are some variables which will determine your consolidation interest rate, including the type of loan and the academic year. Rates vary from 1.88 percent to 6.8 percent.
The Stafford repayment interest rate for loans distributed before July 1, 2006 is 1.88 percent and 2.48 percent in repayment. The Federal loan plus rate is 3.28 percent.
Interest rates are at historically low levels. If you have a variable interest rate loan it may go higher over the next few years. This could be the best time to consolidate loan debt into one low monthly payment.
By: Tina Brown