Saturday, November 08, 2014

Student Loan Debt Consolidation - Myth vs. Reality

Good stuff from

There has been a lot written and said about student loan debt consolidation over the years. The point of this blog is to debunk three common mythes floating around the Internet about consolidation benefits.

The consolidated interest rate changes every July 1.

MYTH. The reality is variable rate Stafford loan rates are subject to change each July 1, which directly impacts your consolidated interest rates.

Like a home mortgage I can refinance my student loans multiple times

MYTH. The realty is that it’s a one shot deal. When you consolidate your federal loans you are locked in for life at the interest rate. I know, seems pretty ridiculous doesn’t it?

I need to consolidate within six months of leaving school or I’ll lose my eligibility

MYTH: Consolidating within six months may be beneficial to students with variable interest rate Stafford loans due to the fact that a lower interest rate is extended to you during that six month window (2% versus 2.5%). However, it is not required that you consolidate within six months. You have an indefinite time frame in which to consolidate your student loans.