Student Loan Consolidation Guide
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Student Loan Consolidation Guide
Student loan consolidation is the process of refinancing all of your existing school loans into one, which will significantly lower the total monthly payment. Consolidation provides quick payment relief as well as long term benefits.
Federal loan consolidation can include PLUS loan consolidation, Federal Stafford Loan consolidation, Direct Loan consolidation as well as HEAL Loan, Perkins Loans and all Federal FFELP and Direct Loans. Before a student can begin consolidating student loans, the government has to confirm that the student owes $10,500 or more in student loans. The government will also verify that the recipient of the loan does not have any defaults on the loans.
Loan providers do not have a set of guidelines that they must follow to determine how much the interest rate of a consolidated loan will be lowered for every student loan consolidation. This is determined differently with each individual on a case-to-case basis. The same is done for extending the length of the loans. The recipient of the student loans will have lower student loan consolidation rates and longer extensions as long as he or she continues to have good credit.
One important benefit of consolidating student loans is the payment relief it provides. By combining all loans into one, the length of the repayment terms can be extended from 10 years up to 30 years. With a lower payment each month, more money will be readily available to pay for other expenses, including car and housing payments. With a consolidation, there is no penalty for overpaying each month; therefore, you can make a higher payment and eventually lower the repayment term.
Benefits of consolidating your student loans
1. Reduces loan payment by as much as 50%. A payment each month that has been lowered can help you be able to afford other expenses.
2. Simplifies finances by combining many payments into one monthly payment. Making one payment each month is much easier than making several with different due dates. This saves a lot of time and frustration when trying to get them paid on time.
3. No credit check required. Credit is not checked when consolidating student loans
4. No fee or application charges for the consolidation process.
5. Reduction of interest rate when consolidating during grace period. Most consolidation programs change a loan with a variable rate into one with a fixed rate. Changing the rate will save money just in case the interest rates get higher in the future.