Plus, if you are eligible for Public Service Loan Forgiveness (PSLF), which provides tax-free forgiveness after 120 qualifying payments, it’s to your benefit to consolidate so that you’re eligible for income-driven plans.Even if you’re not eligible for PSLF, the regular forgiveness options under IDR plans shouldn’t be ignored.
With PSLF, you need to make 120 qualifying payments on the loan before you receive forgiveness.
If you consolidate your loans, the qualifying payments you made don’t transfer to the new loan. If you have these loans and consolidate, you’ll no longer qualify for loan cancellation under that program.
This is accomplished by lengthening the repayment term, which means you’ll pay more in interest over the lifetime of the loan.
If your goal is to pay as little interest as possible, consolidation may still work out.
These loans include: If you have these types of loans and are struggling to make your payments, you may want to consolidate your student loans in order to qualify.
Income-Driven Repayment (IDR) plans can not only potentially lower your monthly payments, but they also qualify you for forgiveness of the remaining balance at the end of the repayment term.
Keep in mind that if you’re a parent with Parent PLUS loans, you can consolidate through a Direct Consolidation Loan on your own.
You can’t, however, consolidate your loans with loans that the student received.
Be sure to talk to your servicer before consolidating to be sure you won’t lose any benefits that you’d prefer to keep.