Federal student loans consolidating again
Today we will discuss the point at which is it impossible to “undo” or reverse a student loan consolidation and one way a borrower can effectively “undo” some mistakes.When a student loan is refinanced or consolidated, a new lender pays off an existing loan or loans in full.
For example, suppose a borrower selected a 10-year variable-rate repayment plan and ultimately decided that a 20-year fixed-rate plan would have been a better choice.However, this move has limited chance of success as most lenders will be eager to cash a check to pay off a loan.The good news is that once borrowers do reach the proverbial point of no return, there are still ways to address many loan concerns…A private refinance of federal loans is one example of a situation that is impossible to undo.The federal loans and federal perks are gone because the loan has been paid off.The new loan, even though it was originally a federal loan, is a private loan in every way.
This means federal student loan forgiveness programs and income driven repayment plans are no longer available.
By starting the refinance process again, borrowers can find a new lenders willing to offer a loan with the desired terms.
The advantage for most consumers is that there is no limit on the number of times a loan can be refinanced, and many companies offering refinance and consolidation services.
Once this payment has been sent the borrower has truly reached the point of no return.
For borrowers who are part of the way through the refinance or consolidation process and thinking about cancelling, the best thing to do would be to call the new lender as soon as possible.
explores the 60-year history of federal student aid programs and the historical perspectives of those involved in their creation and evolution.