Pros and cons of consolidating federal student loans

Funding is limited, so your best bets for securing a loan are to file early, and meet federal financial aid eligibility requirements.Over the course of a student’s post-secondary education, he or she may enter into multiple loan arrangements, with private lenders, as well as the Department of Education.

The low-interest, fixed-rate loans are in-place to provide supplemental funding for students with extraordinary financial aid needs for college. Ford Federal Direct Loans provide general assistance for low and middle-income applicants.

Select, economically disadvantaged students are eligible for additional loans through the Perkins program.

The aid is designed to increase college access for the neediest groups of students.

Perkins Loans fill gaps left after other financial aid is expended.

Perkins borrowers may have multiple outstanding loans, but many students also carry federal Stafford Loans, and others issued through the Direct Loan Program.

Students with multiple federal loans are increasingly concerned about how they will meet repayment obligations after graduation.

If you are, or will be, a public school teacher, or if you teach math, science or special education subjects, you may qualify for Perkins loan cancellation.

When Perkins loans are consolidated alongside other outstanding federal loans, the cancellation benefit is eliminated.

Perkins Loans may be consolidated through the Federal Direct Loan Consolidation Program, provided eligible borrowers also hold at least one Direct Federal Loan other than the Perkins that is to be consolidated.

Once you consolidate through the Direct Federal Loan Program you lose the grace period provided with your Perkins Loan, which is nine months – compared to the six month periods for other loans, like Stafford.

When you consolidate your private and federal loans through a credit union or bank, you could be offered a rate that is lower than what you’re paying right now.

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