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Is consolidating your student loans a smart decision while there is talk of potential student loan forgiveness?

I am considering consolidating my federal student loans but am wondering if it would be better to wait until a decision on student loan forgiveness is made. I think this because consolidated student loans are no longer applicable for student loan forgiveness (as far as I know from researching on Navient).

  Topic Personal Finance Subtopic College Savings Plans (529) Tags student loans loan consolidation student loan forgiveness
2 Years 1 Answer 1.3k views

Jason Tanner

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Answers ( 1 )

 
  1. Peter Yeargin 1298 Accepted Answer Community Answer

    Amir,

     

    This is a tough one. I think it all depends. My wife has quite a bit of student debt but we haven't consolidated her debt for a couple of reasons:

     

    1. She was working in a Federal role and was working towards the 10-year student loan forgiveness program where all your debts are forgiven after 10 years in a non-profit, state/local/education, or federal service. Each year we submit proof that she worked in that role for the past year and it does income-based repayment.
    2. An eye towards student loan forgiveness for us, though this isn't our primary reason. #1 has driven all our actions to NOT consolidate the loans, which are definitely high-interest loans (6-7%), into a private option.

     

    If we consolidate, as you mentioned, they will no longer be eligible for either of these two options.

     

    For reference, here is a link to the public loan forgiveness:

     

    https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service

     

    UTC 2021-07-05 03:17 PM 0 Comments

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