Student debts soared as college tuition costs rose higher than inflation. Although student loans can be your investment for the future, starting salaries of recent graduates cannot keep up with the rise in debt. According to Project on Student Debt, $19,800 is the average debt of about two-thirds of graduating students from four-year institutions.
Fortunately, you can lower your monthly payments with debt consolidation. This is very appealing to struggling graduates. In fact, there is a government program called Direct Consolidation Loan where you can combine your federal student loans in order to apply restrictions that cap interest rates.
However, if you have both federal and private loans, you cannot combine them under one federal consolidation loan. It’s also not wise to lump them together under one private loan because it will most likely increase your interest rates.
Moreover, you can miss out on the good perks of federal loans that could come very handy such as advantageous repayments, cancellation opportunities, and even forgiveness. Another benefit is this: the interest on federal student loans is tax deductible.
So if you really want to consolidate your private loan, you can do so with any institution. You don’t need to stick to the company where your loan originated. And when you compare the interest rates and do proper research, you could definitely find a company that’s suitable for you.