Four Errors That Can Make Federal Student Loan Consolidation A Mistake
For some borrowers, federal direct consolidation is an essential move. For others, it is a huge mistake.
Did you know?
Consolidation can cause your debt to temporarily double on your credit report.
This happens when the new loan is reported to the credit bureaus, but the old loans are not yet removed.
Servicer Selection
Federal consolidation is one of the few times that borrowers get to pick their loan servicer.
Borrowers considering PSLF should select MOHELA as they handle all of the PSLF applicants.
For some borrowers, federal direct consolidation is an essential move. For others, it is a huge mistake.
Streamlining student loan repayment has its advantages, but using a refinance or consolidation for this purpose is asking for trouble.
Consolidation and refinancing can have temporary and long-lasting impacts on your credit report.
Private consolidation of federal loans has major risks and major rewards. With no way to undo the decision, borrowers need to be certain they’re not making a mistake.
Consolidating or refinancing student loans usually impacts borrower credit scores. However, the impact is typically small and short-lived.
If you manage your Parent PLUS loans wrong, it could result in permanent double payments for all of your federal student loans.
Borrowers with federal student loans serviced by Nelnet may wish to consolidate or refinance their loans. Both options have major pros and cons.
The biggest variable in both the refinance and consolidation timeline is usually the borrower.
Consolidation is a quick fix to defaulted federal student loans. Rehabilitation takes a bit longer but has some major advantages.