Student loans are full of truths and myths.

The former facilitates you pay off student loans faster, whilst the latter can price you extra cash. How can you differentiate the two?

Here are the top 10 scholar mortgage myths – and what to do about them.

Myth #1: Student loan consolidation lowers your hobby fee.

The Truth: Student loan consolidation in your federal pupil loans might not decrease your interest price.

When you consolidate federal pupil loans with a Direct Consolidation Loan, the resulting hobby price is equal to a weighted common of the hobby costs of your existing federal pupil loans, rounded as much as the nearest 1/eight%.

Advice: If you need a decrease hobby charge, keep in mind scholar mortgage refinancing.

Myth #2: If you cannot find the money for your pupil loans, there is constantly student mortgage forgiveness.

The Truth: Not exactly. Student mortgage forgiveness is only to be had for federal scholar loans. To acquire scholar mortgage forgiveness, you want to sign up for an profits-driven compensation plan which includes PAYE or REPAYE.

The Truth: It relies upon for your precise occasions. Importantly, you must recognize the distinction between pupil mortgage consolidation and pupil mortgage refinance.

Refinance student loans: If you need to refinance pupil loans and decrease your interest charge, then scholar loan refinancing is probable your nice option. You can refinance federal student loans, personal pupil loans, or each.

Consolidate scholar loans: If you need to preserve your federal scholar loans to have access to earnings-pushed reimbursement plans, forbearance, deferral and public carrier loan forgiveness, then you will want to consolidate your federal scholar loans right into a Direct Consolidation Loan. Remember, the federal authorities will consolidate pupil loans, however will now not refinance student loans. For scholar mortgage refinancing, simplest non-public creditors refinance scholar loans.

Advice: The top news is that you could do each pupil loan consolidation and scholar mortgage refinancing. For instance, you may refinance non-public pupil loans and consolidate federal pupil loans.

Myth #4: A pupil mortgage debt consolidation carrier let you consolidate your student loans.

The Truth: You do not want to rent a pupil loan consolidation carrier. Don’t waste your cash.

Advice: Don’t pay any prices to consolidate scholar loans or for student mortgage refinancing. They each have no expenses.

Myth #five: Student loan forgiveness is free.

The Truth: Yes, profits-driven reimbursement plans inclusive of REPAYE can lead to pupil loan forgiveness in your federal student loans. However, this form of pupil loan forgiveness isn’t always loose. You basically alternate your pupil mortgage debt for a tax bill. That method you could owe income taxes on the quantity of student mortgage forgiveness you acquire.

Advice: The idea of “student mortgage forgiveness” may also sound exciting, but ensure to weigh your options to decide if different student loan repayment options can be higher for you.

Myth #6: Public Service Loan Forgiveness is automated in case you work in public provider.

The Truth: Public Service Loan Forgiveness is not computerized, and among different necessities, you have to make the majority of your federal pupil mortgage bills whilst enrolled in a federal earnings-driven reimbursement software and consolidate your federal pupil loans if you do not have Direct Loans.

Advice: Complete the Employment Certification Form for public carrier loan forgiveness, and post yearly and whilst you convert jobs.

Myth #7: You should depend on your scholar loan servicer to present you the pleasant advice.

The Truth: You must depend upon yourself to get all of the answers you want. Your student loan servicer may offer you recommendation, but it may not be the fine recommendation for you.

Advice: Do your homework. Compare options. Get knowledgeable.

Myth #8: You can skip a student loan price if you have economic hassle.

The Truth: If you observed you could face economic hardship in the near-term, touch your pupil mortgage servicer without delay. You can not just bypass a payment. The quicker you compare your student loan reimbursement alternatives, the better.

Advice: Skipping a charge can hurt your credit score score. You can attempt to refinance your student loans to reduce your interest charge and scholar loan bills. You can also make a lump-sum fee to lessen your fundamental stability.

Myth #nine: Federal student loans have the lowest hobby charges.


The Truth: Not necessarily. Federal pupil loans provide functions which includes earnings-based totally compensation, forbearance and deferral, however they don’t continually have the lowest interest charges. With federal student loans, every body gets the identical interest fee – regardless of your credit score. Private scholar loans are based totally on your character credit profile and different elements, so hobby prices may range for every borrower. Therefore, when you have strong credit score, you can receive a lower interest rate from a non-public student mortgage lender.

Advice: Always compare interest charges among federal and personal scholar loans. Graduate college students with prior work experience, sturdy credit ratings and income profiles, mainly, can be capable of comfy decrease hobby quotes with personal creditors.

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