How To Consolidate Your Student Loans

Learn how to consolidate your student loans.
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Once you have graduated from college you may be eligible to consolidate your student loans. It is important to carefully consider this option, since it is only available to you to do once. It is not a good idea to consolidate your student loans with your spouse's student loans. If you pass away, your estate is not responsible for the student loans, but if they are consolidated with your spouse's loan, he will still need to pay them back.

This benefit is only for federal student loans. You may also consider consolidation into a Federal Direct Loan so you can qualify for the student loan forgiveness programs.

Make Sure You Qualify for Student Loan Consolidation

You need to make sure that you qualify for student loan consolidation. You need to have finished school. You can not currently be enrolled in a program. You need to determine which loans qualify. You will have the opportunity to consolidate your subsidized and unsubsidized Stafford loans. Since each year is a considered a new loan you should gather all of your loan papers and billing statements to make sure you do not forget one of the amounts.

Separate Your Private and Federal Student Loans

The Federal Direct Loan program will allow you to qualify for forgiveness programs and they offer a locked in rate. This is the best option for federal student loans. If you are trying consolidate your private student loans, you will need to consider which lending company to go with.

Many companies will offer further discounts for automatic draft payments or give you a lower interest rate after a certain number of on time payments. However, some companies state that consolidation disqualifies you from these discounts. You should carefully read the fine print regarding each student loan consolidation application.

Determine If You Should Lower Your Payment

You need to realize that while consolidation may be lowering your monthly payment, you will end up paying more in interest on the loan. The consolidation generally takes a ten year loan and stretches it to twenty or even thirty years. If you take advantage of the lower interest rate, you may consider paying it off at quicker rate to avoid paying all of the extra payments.

Apply for the Consolidation Loan

Fill out the application for the student loan. Most student loan companies have an online application for student consolidation loans. Depending on your financial institution, you may have to talk to someone. Before you sit down to fill out the application, be sure to have all of your student loan information available to you.

Pay Attention to Your Deadlines

The student loan rate increases July 1 every year. If you file before this time you will lock in a lower interest rate and save yourself money. This is an important deadline to meet. If you have just graduated and you are in the six month grace period you can still consolidate the loans and have the grace period last for six months.

You will need to talk to customer service representative to make sure the loan company understands what you want to happen.

Make Sure to Read the Fine Print

Once the consolidated student loan comes through, triple check the paperwork. It is not uncommon for mistakes to have been made and the wrong interest rate applied. This is especially true if you consolidated during your grace period. Be sure that you locked in the rate that you applied to lock in. This rate is not dependent on your credit score (as a private student loan rate would be) since it is set by the federal government.

What You Need:

  • All of Your Student Loan Account Information

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