I recently received an education award that can be applied to the cost of tuition or used to pay off existing student loans. I have two existing student loans with one lender and a third student loan with another. All three loans have the same interest rate and I am considering consolidating them together. My question is whether or not I should use the education award to pay off the smaller loan in full as to have it reflect paid on my credit report and use the balance to pay on one of the other existing loans before the consolidation takes place? Or does it really make a difference?
Two of the loans are private and the other is with the Fed. I have completed my degree and plan on using the educational award to pay toward these existing loans.
In my opinion you should pay off the private loans first because those loan companies can increase your interest rate for just about any reason. At least the Fed locks you in a rate once you're approved and/or once you consolidate.