“A Federal Consolidation Loan is an outstanding debt-management tool. It can help you repay your federal education loans at a low, fixed interest rate with flexible repayment terms. Consolidation can lower your monthly payments by up to 60 percent.
“Consolidation allows for significantly reduced monthly payments since the repayment period may be extended to as much as 30 years depending on the total loan balance. Lower payments leave you with more money to allocate towards other household expenses including car payments, childcare, and other necessities. While extending the repayment period increases total interest payments (smaller payments are made over a longer period of time), there are no prepayment penalties for accelerating repayment.
“Education loans can vary in terms of interest rates, repayment periods, and borrowing limits. Keeping track of multiple loans with multiple lenders can be difficult. Consolidation simplifies loan repayment by turning multiple loans with different interest rates into a single loan with a fixed interest rate. The consolidated rate is based on the weighted average of the interest rates of the loans being consolidated rounded up to the nearest 1/8th percent or 8.25 percent — whichever is less.
“The NextStudent Consolidation Loan goes even further by offering an additional 0.25 percent (1/4%) interest-rate reduction for automatic checking withdrawal. By doing this you will receive an immediate 0.25 percent (1/4%) reduction in your interest rate. In most cases you can choose the day of the month the payment is deducted from your account.”
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