Consolidation Federal Student Loans

What is consolidation?

Consolidation is essentially merging two or more loans into a single loan. You may consolidate if:

Your payments are way beyond what they should be;

You have had a job for less than a year and are struggling to pay back your loans;

You want to reduce your monthly payment burden;

You’ve exhausted all options at your school to lower your interest rate or make your payments easier. Many schools offer an educational consolidation program to help students who find themselves in these situations.

Your consolidation counselor will advise you on whether consolidating makes sense. There may also be federal student loan laws that affect how much you can consolidate. For example, many school financial aid offices only allow borrowers to consolidate their loans once per academic year. If eligible, you’ll need to complete an FAFSA application to determine your eligibility for consolidation.

Why do my loans get consolidated?

Student debt is often treated like a giant credit card. When you borrow money, lenders take out a lien on your future earnings—essentially giving them a claim on your paycheck. So even though you might think that you’re paying off your entire education debt today, the reality is that your lender will continue to collect interest until you repay the full amount. In fact, some studies estimate the total cost of an undergraduate degree to exceed $250,000! That’s why we know that you shouldn’t run up your credit cards until you completely pay off your student loans.

But just because you’ve already paid off your loans doesn’t mean you should stop making payments. In fact, continuing to make timely payments helps build a stronger student loan portfolio. Consolidate your student loans before you graduate and you’ll save money on interest payments—and maybe even qualify for a lower APR.

How does consolidation work?

When you consolidate your loans, you keep making payments on your original loans plus add any accrued interest to a new loan. The new loan carries a fixed APR (the annual percentage rate), usually between 6% and 8%, depending on your income level. Because you’re not accruing any additional interest, you won’t be charged late fees. And because your new loan will be paid over a longer period of time, you’ll see fewer fluctuations in your payment amount.

You’ll still be responsible for any unpaid balance after graduation. But since you’re now paying on a smaller loan, you’ll end up repaying your original debts faster.

Is consolidating right for me?

Consolidation Federal Student Loans

Consolidate loans

The first step in consolidating student debt is to consolidate federal student loans. You may think you should do this sooner than later, but once you get started you’ll want to make sure that you don’t miss any payments. If you try to go through consolidation without paying off your current loan, you could end up having to pay even higher interest rates. Take a look at our tips on how to properly consolidate student loans.

Make monthly payments

You need to plan out your repayment schedule ahead of time, otherwise you may find yourself in trouble if you’re late with your payments. Try to set aside enough money to cover your payment each month. Once you have your total monthly expenses figured out, you can use that number to determine what amount you can afford to put toward your repayments each week.

Check your credit score

Once you’ve got a good idea of how much you can comfortably afford to pay back each month, check your credit score. You won’t want to get behind on your payments again! If you can improve your credit rating, then you’ll be able to qualify for lower interest rates.

Choose a lender

If you have private student loans, choose a company that offers flexible terms. There’s no reason to stick with a single loan provider, especially since they may raise your rates over time. To help you narrow down your options, we’ve created a list of the top five companies and their typical products and services. Read about them here.

Find the right product

When looking for a student loan that works well with your budget, take a look at the different types of plans on offer. Depending on your situation, you might want to consider income-based repayment or forgiveness programs. In both cases, these plans involve refinancing your current loans rather than getting new ones.

Don’t forget to save

Student loans aren’t free, so be prepared to spend some extra cash. Luckily, there are ways to minimize your costs. Before making a final decision, research online lenders to ensure you get the best deal possible. Remember, you could end up saving hundreds of dollars per year just by using a search engine instead of a traditional lender.

Keep track of everything

Make sure you keep track of all your payments. After you’ve consolidated your loans, you’ll receive a notification from the Department of Education letting you know when your payment is due. Then, you’ll need to send that information to your original lenders along with a copy of your payment stub. Your lender will review your documentation and issue a statement on whether you were approved for a loan modification.

Consolidation Federal Student Loans

Consolidate your student loans & save money today.. LegalDisclosures / ImportantNotes Regarding Students and SchoolStudents:

If you already have private student loans you can still consolidate them at no cost!

In order to get good interest rates, we recommend paying back your student loans BEFORE starting school (or as soon as possible).

Most schools make payments automatically on the 1st of each month – so you never know what charges you might receive from pay day to pay day!

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Consolidation Federal Student Loans

Consolidate student loans

This was first introduced in 2010 under the Obama administration. When you consolidate federal student loans, they pay off faster than paying them individually. You’ll save money if you have multiple loans. Most people think that consolidation is only useful if you have 10% or less of the total amount due each month. This isn’t true at all. You could benefit from consolidating any loan amounts up to $100.

Pay off all your student loans

Another reason to consolidate your student loans is because you want to get rid of all of them. If you have no debt left after a year or two, it will make you feel much better about yourself.

Save money over time

You may not realize how much your monthly payment would be without consolidation. Many companies offer great deals if you choose to go with their program. Once you’re done paying off your consolidated loans, you don’t need to worry about making any payments again.

Lower interest rates

The interest rate on your loans will increase if you do not consolidate your loans. After you’ve paid off your loans using the consolidation program, your interest rates will drop. You’ll probably pay less than what you would otherwise. Interest rates on federal direct loans are fixed at 6.8%.

Make sure your school doesn’t charge for consolidation

Many schools charge students an additional fee whenever a person applies for consolidation. Your school should already have a way to apply. They may even let you know how much the fee is before you start applying.

Get a free credit score

If you decide to use a company’s plan, they will give you a free copy of your credit score. This is a good option for those who need to know where they stand financially. There are many different ways to check your score, and some companies even give you your score online.

No fees

Companies don’t charge anything to help you out when you consolidate your loans. All of the money that you put towards your loans goes directly towards your goal. It won’t affect your credit in any way. You simply provide proof of income and that you owe a certain amount of money.

Consolidation Federal Student Loans

Description: Consolidation student loans are federal student loans that have been consolidated into one loan. If you are currently repaying several student loans, then consolidation would be a great option for you. These have lower interest rates than private student loans, they are easier to manage and you only pay back 1 loan instead of several.

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