Consolidating stafford and perkins loans

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While private loans cannot be consolidated under a federal loan, private lenders may be more than happy to take over your federal loans.That doesn't make it a good idea, says Betsy Mayotte, director of compliance for American Student Assistance, a nonprofit that helps students manage college debt."Don't ever consolidate private loans with federal loans," Mayotte says. Loan benefits: Some federal loans carry benefits that other don't."You end up paying a lot more in the long run."[Discover 10 ways to save on college costs.]4.Think short and long term: Recent graduates should not base their decision to consolidate solely on their current financial picture, Mayotte says.The National Student Loan Data System gives students a rundown of each federal loan by type and date disbursed.Most borrowers have a mix of subsidized and unsubsidized Stafford loans.Loan consolidation can also be a lifeline for borrowers in default, says Loonin, with the National Consumer Law Center.

Each subsidized, unsubsidized, Perkins and PLUS loan borrowed each semester or quarter comes with its own interest rate and monthly statement.[Learn about recent student loan interest rate changes.]Keeping tabs on every loan and figuring out exactly what is due each month can be tricky.

If borrowers combine low interest rate loans with those that have a higher rate, they could wind up paying more interest over time, says Deanne Loonin, director of the Student Loan Borrower Assistance program at the National Consumer Law Center."It plays out different ways for different people," Loonin says.

"Some people, particularly if they have subsidized loans at different interest rates, their interest rate could go up if they put them all together."Borrowers should also know whether their loans are through the federal government or a private lender such as Chase or Wells Fargo.

"If you have a Parent PLUS loan, do some extra research and make sure you're not making things worse for yourself."[Discover the perks and pitfalls of simplifying student loan repayment.]On the flip side, consolidation could help borrowers gain access to forgiveness options such as the Public Service Loan Program, as well as the Pay-As-You-Earn repayment plan, notes Kantrowitz of 3.

Simplifying doesn't guarantee savings: Consolidation can reduce what can be dozens of loans and payments to just one loan and one payment.

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