Consolidating your loan
You’ll pay more in interest over the length of your new repayment term, but an income-driven repayment plan can make keeping up with your payments possible on a small salary. If you have older federal loans, you may have some with variable interest rates.
Plus, if you have debt left over when the repayment term is up, it will be forgiven (but taxed as income). That means the interest and monthly payment can change according to market conditions.
That can help give you more breathing room in your budget.
In cases like this, consolidating your student loans could help you manage your loans more efficiently. Here’s what to keep in mind before you dive into student loan consolidation.
If you have multiple federal student loans and want to simplify your payments, consolidating can be a smart strategy.
Here are three situations when consolidating your student loans might make sense for you: 1. If you’re struggling to make your payments under a 10-year, Standard Repayment Plan, consolidation can help reduce your monthly payments.
When you take out a Direct Consolidation Loan, you can extend your repayment term to up to 30 years and get a smaller payment.