When should I consolidate into more than one federal loan?

SimpleTuition

By SimpleTuition
The smart way to choose student loans

It may make sense to consolidate your loans into two separate consolidation loans. This situation arises occasionally when the method of calculating the interest rate on your consolidation loan gives more weight to loans that have rates higher than the capped consolidation rate or rounds up the interest. Here are a few examples:

  • If you are consolidating PLUS loans, consolidate any PLUS loans taken out since July 1, 2006 separately from PLUS loans taken out prior to July 1, 2006.
  • If you are consolidating loans with an interest rate that falls on an even 1/8th of a percentage rate (for example, 7.125%) – but is not greater than 8.25% – consolidate those loans separately.
  • Consolidate any loans with an interest rate greater than 8.25% separately from other loans. This way, their higher rate won't bring up the interest rates of the other loans.

Remember to keep these consolidation loans separate when working with your lender.

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