While looking into your federal student loan, you may have come across the term "loan consolidation." That can be a very valuable tool for addressing your loan debt, but what is it? What can it do?
Well the simplest answer I can give you is to substitute the word "refinance" for "consolidation, because that is basically what it is. When you consolidate a loan, you are taking out a new loan to pay off the old one. But wait, people refinance to get a better interest rate, and it doesn't look like the rate is going to change much. Why would I want to consolidate? There are three reasons.
- To Combine Serveral Student Loans Into One
- To Benefit from a Repayment Plan Program
- To Get Out of Loan Default