Consolidation Loan allows students to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. There are two types of student loan consolidation:
- Federal student loan consolidation; which is a logistical move one do through the department of education. Therefore, you may need to consolidate to be eligible for some federal loan repayment programs, but federal consolidation will not lower your interest rate or save you money.
- Private student loan consolidation; which is also called student loan refinancing, is a financial move one do through a private lender. However, if you qualify based on factors including your credit score, you can save money by getting a lower interest rate.
When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan. One is eligible once he/she graduates, leave school or drop below half-time enrollment. Consolidating federal loans through the department of education is free; steer clear of companies that charge fees to consolidate them for you.
Additionally, you will get a new loan term ranging from 10 to 30 years. Your repayment per term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance. Applying for consolidation takes most borrowers less than 30 minutes, according to the Federal Student Aid website. As part of the process, one will need to provide details about their existing federal student loans, and choose a federal loan servicer and repayment plan for their new consolidation loan.
Therefore, with most student loan consolidation it is always best one to have a clear understanding of the exact details of the loan conditions and their possible implications. The following are five tips one need to consider before going ahead with the consolidation plans;
The interest rates for everyone will be the same rate
This is where all federal student loan consolidation rates have to start with the rates as …Read More