Consolidate Your Student Loans

Save Money, Avoid Default

Consolidating student loans can help make mountains of debt much more manageable. According to the National Postsecondary Student Aid Survey, a large majority of four-year college grads has close to $20,000 in debt wracked up. Grad students—much more; and medical and law students—exponentially more.

Consolidation loans are now standard for both federal student loans and private loans. Consolidation loans do not just combine loans. A lender actually pays off the loans you’re consolidating and rewrites a new loan, the consolidation.

Time to Consider Consolidation

How do you know when it’s time to talk to your lender about loan consolidation?

  • You have been delinquent on monthly student loan payments.
  • You have multiple federal and/or private student loans.
  • You foresee large financial obligations that could put your monthly payments at risk.

If you find yourself drowning under student loan payments a student loan consolidation offers an affordable solution that could just save your financial future. You’ll get out of debt and sleep easier at night. And guess what? Lenders have a stake in your financial health. This is why they offer consolidation loans.

Federal Loan Consolidation

Two federal student consolidation loans are available: the Direct Consolidation Loan and the FFELP Consolidation. The federal consolidation programs allow borrowers to refinance all their federal loans.

Benefits of federal loan consolidation:

  • Interest rate is lowered.
  • Monthly payments may be nearly halved.
  • More money in your pocket each month.
  • Extend your repayment period from 10 to 30 months.
  • Protect your credit rating.

Private Student Loan Consolidation

Student borrowers opt to consolidate private student loans for the same reasons they do federal—relief from the monthly cost and financial stress.

Private loan payments are refinanced as one low-interest loan, which puts more cash in your pocket each month.

Lenders approve loan consolidations based on credit. You may borrow with a co-signor. Most lenders release the co-signor after a certain length of time provided you make consistent on-time payments.

While the interest rate for private loan consolidation is typically higher than that of federal consolidation, you can still get a good rate.

Applying for Student Loan Consolidation

The application process for student loan consolidation depends on the type of loans you will be consolidating.

  • Federal student loan holders have two options when consolidating: Typically if you have Direct federal loans you apply for a Direct Consolidation Loan through the Department of Education. For FFEL loans you can apply to your lender for the FFEL Consolidation or to the Direct Consolidation Loan program.
  • Private student loans must be consolidation through a private lender, either the lender that originated the initial loans or another. Remember, private consolidation loans are credit-based.

Before you default on student loans always choose loan consolidation.