It’s typically considered for people who have high consumer debt.
But most of the time, after someone consolidates their debt, the debt grows back. They still don’t have a game plan to pay cash and spend less.
If you're consolidating with the federal government, consolidating your loans means combining your multiple federal student loans into one new federal loan, called a Direct Consolidation Loan.
You have some flexibility in picking your loan term, but you'll simply receive an interest rate that's a weighted average of your existing rates.
Federal student loan consolidation basics How to consolidate federal student loans Benefits of federal consolidation Drawbacks of federal consolidation Private student loan consolidation (student loan refinancing) When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan.
You’re generally eligible once you graduate, leave school or drop below half-time enrollment.
Truth: Debt consolidation is dangerous because it only treats the symptom.
Debt consolidation is nothing more than a con because you think you're starting with a clean slate.
But the truth is the debt is still there, as are the habits that caused it—you just moved it!
Once your loan is rehabilitated, the default status will be removed from your loan.
You will regain eligibility for benefits that were available on the loan before you defaulted, such as , and you will be eligible to receive additional federal student aid.
So, for instance: If the average comes to 6.15%, your new interest rate will be 6.25%.