There are many loan consolidation programs that offer to consolidate private and federal debt together into one monthly payment. Although one monthly payment for all debt sounds tempting, the resulting interest costs are definitely not worth the convenience. The Federal Consolidation Loan Program is the most cost-effective way to manage your federal debt because the federal loans remain at a simple interest rate—meaning that you only pay interest on the principal balance you borrowed. By transitioning your federal debt into a private loan consolidation program, your federal debt will begin to compound interest and you will lose out on the low interest rates you received with federal loans. Private loans will most likely have higher interest rates than federal loans: therefore, one solution is to defer your federal loans until you can pay off your private loans. To pay less interest on your loans and pay them off faster, keep your federal loans within a federal consolidation program and manage your private loans separately.
Today, there are many lenders offering consolidation programs, all with unique borrower benefits. Physicians should seek out a lender who can answer questions specific to medical loans, and be flexible to a doctor’s busy schedule. Some lenders offer “teaser” interest rates that sound appealing, but are often unobtainable for most borrowers. So check the eligibility requirements of any benefit that is being offered to make sure that you qualify.
