Cons of consolidating student loans
The private refinancing company pays off the federal loan program, essentially buying your debt.Student loan refinancing is similar to refinancing a mortgage or car loan.Federal loan consolidation combines multiple government-sponsored loans into just one loan.It simply takes the weighted average interest rate of the loans being combined.Jenna Hatfield, of Lincoln, Nebraska, who will begin making monthly payments to her 0,000 student loan in November, a simple consolidation of her federal loans was the way to go.Those federal benefits were important to her as she intends on doing an income-based repayment plan.
I felt that was the best option for me." As for disadvantages, graduates who refinance federal student loans will lose many of the benefits that come with federal loans, such as loan forgiveness and income-based repayment programs.
When it comes to consolidating private loans, interest rates are not based on a weighted average of the existing loans' rates.
Instead, a private lender will typically use a borrower's credit score and other financial information to provide a new interest rate on the consolidated loan.
If a dentist comes under hardship, he or she won't be able to apply to defer monthly payments.
However, So Fi does have a forbearance program that is similar to that of the government. Macklin said dental school graduates interested in refinancing but who need those federal benefits should wait, possibly up to a year, to make sure they're on stable financial ground.