Consolidating student loans in default
Consider federal consolidation if you: If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill.The FSA Ombudsman works with student loan borrowers to informally resolve loan disputes and problems.Before contacting the FSA Ombudsman Group, use this checklist to gather the information you’ll need to discuss the dispute with them.
But it’s only for federal loans, and it won’t cut your interest rate.
Learn more about the Public Service Loan Forgiveness (PSLF) program.