Cost of consolidating student loans

One of the collection tools available for defaulted federal student loans is called a Federal Income Tax Return Intercept.Depending on the status of your federal student loan, you may end up losing your tax refund. If you’re not making payments becuase you have a deferment or forbearance, do yourself a favor and double check the status of that.Any payments and savings will depend on the actual amounts for which you are approved, should you choose to apply.of the interest rates on the federal student loans that are combined into the consolidation loan.The weighted average combines the interest rates into a single interest rate that yields a combined cost that is about the same as the cost of the original separate loans.

By contrast, current interest rates for new fixed-rate federal Stafford loans are 4.66% for undergraduates and 6.21% for graduate and professional students.Common Bond, which has refinanced about 0 million in student loans so far, restricts its prospective clients even further to those with business, law, medical, or engineering degrees, says Chief Executive Officer David Klein.The lenders tout variable rates that start at less than 3%.Those protections include access to federal income-based repayment and forgiveness programs as well as generous forbearance and deferral options."Those are very important rights," says Persis Yu, staff attorney for the Student Loan Borrowers Assistance site run by the National Consumer Law Center.Yu questions whether the borrowers targeted by these lenders understand how vulnerable they are to financial setbacks such as job losses."A lot of people think they're not ever going to default," Yu says, "but there are very high delinquency rates on student loans."Who's getting loans So far the lenders are wooing the lowest-risk borrowers: graduates with steady jobs, good credit and enough income to pay down their loans.

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