No matter how desperate you are to consolidate your student loans, you are reminded not to consolidate both your federal and private study loans together. It is a very bad idea to combine them for the following reasons:
· You have the freedom to further your studies in future even you have consolidated your federal loans. However, once you lump both federal and private loans, it is totally not possible for you to defer your payment if you want to go back to school.
· You are not able to save cost when you consolidate both types of loans together. You are not allowed to claim interest as a tax deduction on a private loan consolidation.
· No matter what line you are in, it is not possible for you to apply for forgiveness on a private loan consolidation. However, you stand a higher chance to waive your federal loan if you are working in certain sectors like military service, teaching in economic development zones, joining federal volunteer programs, etc. Under certain circumstances, the government is willing to dismiss part or all of your federal loans. If you consolidate both private and federal loans, you will no longer enjoy this benefit.
· The interest rates for federal loan consolidation plans are always much lower than private ones. In order to enjoy lower interest rate, don't ever try to combine both loans. In general, the interest rates for private loans are variable and it is hard for you to lock in for today's current historic low rates.
Last but not the least; you are advised to consolidate your federal loans first so that you are able to eliminate part of your debts. For there, you can boost your credit score gradually. By doing so, you can eventually obtain a better term for your private loan consolidation in the near future.
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