Here's how to tell if consolidating your student loans would actually save you money. (via CNBCMakeIt)
That means if you have a private student loan with a variable interest rate, you may see a slight dip. If you have a fixed rate private student loan, the cuts won't affect you directly. However, it still could be a good time to consider consolidating your loans and refinancing at a lower interest rate.
"Consolidating can be a great tool for your student loans," says Tiffany Aliche, personal finance expert and founder of . But it pays to understand how the process works and which types of student loans benefit the most from refinancing.There are fundamental differences between public and private student loan options.
Private student loans are pretty straightforward. "The thing that people don't realize is that a private student loan is really just a loan. It could be a car note, it could be a mortgage. It's just a loan that you happened to use for education," Aliche says. Interest rates on these loans range from 3.8% to nearly 13% among the biggest lenders, according toBut federal student loans are different. They have built-in benefits, as well as fixed, low interest rates.
If you stay within the federal student loan system, consolidating doesn't save you money, it simply combines multiple loans into one. It may lower your monthly payment by extending the loan period, but if you do take that route, your interest will increase.
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