A Simple Guide On How To Consolidate Student Loans
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| Consolidate Student Loans |
If you are on this page right now and you are reading this, then I guess you probably have a student loan repayment fast approaching. Fortunately for you, you have got a few tips for repaying your student loans and one of them advises you to consolidate student loans which you soon discovered made perfect sense for your financial situation. However for some students, after checking out the pros and cons, and examining their future career and life plans, a loan consolidation may not be right.
This is the reason why you need to think about your future and compare the different types of consolidation options available; in any case you opt to consolidate student loans. Given the time, work and money that you have put into your education, this is a smart move. Sure it’s been a ton of hard work, you’ve made lots of sacrifices and most likely there’s a financial burden now placed on you and your family, but you hoped that your degree will provide a foundation for you to earn more than someone who hasn’t earned that credential. It is true, but paying back student loan is usually not as easy as it may seem.
Consolidate Student Loans – definition of consolidation
Even though the loan consolidation process and all its terminology can be very confusing and complex, its basic concept is usually easy to understand. Consolidation interprets to taking all your outstanding federal student loans and bundling them into one new student loan with one monthly payment. The new monthly rate is fixed and the length of the loan can be extended all the way up to 30 years, thus, lowering the amount of your monthly payments and making it easier for you to pay and not miss payments.
Consolidate Student Loans – the pros and cons of consolidating student loans
Although there are many good reasons to consolidate your student loans, there are however other factors that all student borrowers will need to consider before making their decision. No doubt that on the positive side you’ll simplify your life with one monthly payment that will come from one lender and also one point of contact in any case you need to ask any questions. Your monthly payments will be lower because you are extending your loan’s term, and so you enjoy payment relief. However, this doesn’t mean you should plunge into any consolidation plan. Let me wrap up the pros and cons in one bit.
Positive +
- One fixed monthly payment.
- One lender to contact.
- No fees
- Reduced monthly payment, thus, more disposable funds.
- No credit checks
- No prepayment penalties, that means you can just pay it all off whenever you can.
Negative –
- It takes a lot of time to pay back
- At the end of the day, the total cost of the loan is higher
- Locked interest rate, this means that if the rates go down, your rate won’t change
- You will lose the other benefits of previous loans.
In any case you are wondering about any federal loan and if you can also consolidate another common category of student loans which is the private student loans. Private student loans come from private lenders such as banks and are not subsidized or guaranteed by the government. These loans cannot be consolidated under federal loan consolidation guidelines, but you can however find private consolidation loans.
Consolidate Student Loans – knowing if you are eligible to consolidate a Loan
Although the requirements for consolidating a student loan vary by each lender, here are a few general guides. However, it is very important that so check with your consolidator to find out more information. It will help you make a clearer choice.
- Make sure you have any of the qualifying federal loans.
These few plus some other less common types of federal loans and almost any federal education loan can be consolidated.
- Subsidized and unsubsidized Stafford Loans
- Direct student loans
- Federal Consolidation Loans
- Federal Direct Consolidation Loans
- Parent Loan for undergraduate Students (PLUS)
- Direct Parent loan for undergraduate students (Direct PLUS)
- Direct Grad PLUS Loans
- Perkins Loans
- Make sure you have total outstanding federal education loan balances. The amount can vary from one lender to the next, although some lenders consolidate less.
- Make sure that none of your existing student loans are in default. In any case you are in default on a loan, first make repayment arrangements with your lenders, you will need to do this before you will be considered.
- You must be a citizen
- You are no longer or will soon be no longer enrolled in the program for which you borrowed the loans you want to consolidate.
