Should You Opt For Private Or Federal consolidation Loan?
Today’s tough economic situation has prompted many students who are stuck with multiple student loans to consolidate them under the federal loan consolidation program. Consolidation provides extended repayment terms, flexible options for repayment and renewed deference.
Borrowers can opt for either the private or direct loan consolidation. A private student loan is not eligible to be consolidated together with federal student loans as they are not of the same loan type.
There is a lot of difference between the federal loans and private student loans. Federal student loans such as the PLUS and Stafford loans are offered at rates of interest that are very low as compared to the private student loans. These loans offer during deferment and enrolment qualifying periods, government subsidized rates of interest. Though such benefits for borrowers vary, federal student loan interest rates and fees do not vary with different lenders.
Private loans are usually opted for by those for whom the federal loan amount is not enough to cover the education cost. Private Loan Consolidation is possible only with private lenders. All your federal student loans on the other hand can be consolidated under a direct loan consolidation plan. You can apply for consolidation with the direct loan servicing center that will obtain the loan, guide you in the right direction based on your requirements and also manage your loan portfolio effectively making your job simpler.
If you are currently running both private and federal student loans, you can consolidate them in two separate processes and just manage two repayments every month.
Features offered by private loan consolidation include single payment every month, maximum consolidation amount requirement of $150,000 and minimum amount of $7500, credit based processing and variable rate of interest.
Federal or Direct Loan Consolidation conducts no credit check on borrowers and charges a fixed rate of interest. Here again, you can benefit from a single monthly payment.
