Consolidating Student Loans – Myths Vs Realities

There has been a lot of conflicting stories written about consolidating federal student loans. This post tries to bust a couple of myths surrounding federal student loan consolidation.

The interest rate of the consolidated student loan changes every July 1st.

This is a MYTH: The truth is the consolidated student loan interest rate is affected because the variable rate Stafford loan interest might change every July 1st. Your consolidated loan rate will remain the same if the variable rate Stafford loan rate doesn’t change.

Just as I can refinance my home mortgage, I can do the same with my consolidated student loans.

This is a MYTH: The truth being that the consolidating your student loans is a one off thing. The interest rate at which you consolidate remains the same for the rest of the life of the consolidated loan.

If I don’t consolidate within six months after graduation, I’ll loose the eligibility to consolidate.

This is a MYTH: Consolidating with six months of graduation only carries the benefit of receiving a lower interest rate on your variable Stafford loan. But you are not required to consolidate within this period. You can consolidate your student loans anytime in the future.

No related posts.