Drawbacks: When you refinance federal loans, you won’t be able to repay them on an income-driven plan or receive forgiveness through Public Service Loan Forgiveness or Perkins loan cancellation.

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The government combines your loans into one direct consolidation loan and assigns you a 10- to 30-year repayment term based on your total balance.

You can apply for a direct consolidation loan online at

It’s always free to consolidate your loans with the government on

Steer clear of any company that charges a fee to consolidate them for you. You can refinance private loans, federal loans or both types together.

You’ll also lose forgiveness benefits specific to Perkins loans if you consolidate them.

Consider keeping those separate when you consolidate if you plan to take advantage of Perkins loan cancellation.You can improve your credit score and refinance later, or you can use a co-signer.Sign a written agreement – You can ask questions (such as fees, monthly payment amount, etc.) during the counseling session.You can also compare student loan refinancing options using our guide, which includes reviews of each lender.Interest rates: Your financial history — including your credit score, income, job history and educational background — will dictate your new interest rate when you refinance.If it has become worse, notify the counselor so that he/she can re-negotiate a new payment plan with your creditors as per your current situation.