Introduction

Student loan consolidation is a way to get out of debt faster and save money on interest fees. However, just like any other financial decision, you must know what you’re doing. I’ve outlined everything you need to know about student loan consolidation:

• What federal loans are eligible for consolidation.
• How private loans work with the federal government.
• How much interest rates will change after you consolidate your debt?

Federal student loans

When you borrow money from the federal government, your options are much more limited. While federal student loans offer fixed interest rates and income-driven repayment plans, they do not provide flexible repayment options.

Private student loans

It is not possible to consolidate private student loans. Refinancing, or IBR. If you have a personal student loan, it’s best to pay off your debt as quickly as possible.

Direct Consolidation Loan

Direct Consolidation Loan. This is the most common student loan consolidation option, and it’s offered by the Federal Direct Loan Program (FDLP). This program allows for the consolidation of both federal and private student loans into a single payment, which includes:

• Federal Stafford Loans
• Plus Loans
• Supplemental Loans for Students (SLS)
• GradPLUS loans

Consolidation eligibility

You may be eligible for student loan consolidation if you have federal and/or private student loans.

• Federal loans: You can consolidate any type of federal loan, including Stafford, Perkins, Grad PLUS, and consolidation loans. However, suppose your current repayment plan is income-driven (like Income Based Repayment). In that case, you won’t be able to switch to an income-driven plan after consolidating your federal loans because it would require re-certifying your income annually.
• Private student loans: If your lender allows it (and most do), they will enable you to include personal student loans in a federal consolidation application as long as they are not owned by Nelnet or Great Lakes Higher Education Corporation (two significant services). Private lenders may also require that all outstanding balances on their accounts be paid off before they’ll agree to participate in a federal consolidation application with them included in the mix; however, Before assuming anything about the available options, it is advisable to check with your lender as this may not always be the case.

Interest rates

The interest rate you pay on your student loans is determined by the type of loan you have and your credit score. It’s important to note that this is not a variable rate, so it will only change over time if you refinance with another lender or take out new loans. The weighted average of all loans in the consolidation determines your interest rate, which means that if one of your loans has a high APR (annual percentage rate), then this will increase the overall cost of borrowing for the entire consolidation package. If you have good credit scores, then there should be no problem getting approved for an affordable repayment plan!

Loan consolidation benefits

Loan consolidation is a great way to reduce monthly payments, eliminate extra fees, lower your interest rate, and improve your credit score. If you’re in default on any of your loans–meaning that you haven’t been making payments on time or at all–consolidating can help get you out of bankruptcy by ensuring that all of your loans are paid off on time in the future.

Consolidation can also help lower monthly payments by extending the time they are repaid (for example, paying back $10,000 over ten years instead of 5). This means that even though it will take longer for someone who consolidates their student loans to pay them off entirely than if they didn’t reduce at all (because there’s more principal left outstanding), they’ll still save money overall because their interest costs will be less due to having lower-rate loans combined into one new one with longer terms

Drawbacks of loan consolidation

• Consolidation will not lower your monthly payment.
• It could increase interest rates.
• If you consolidate with a private loan, you will lose access to federal repayment options such as deferment and forbearance (which allow you to put off payments when times are tough).
• If you consolidate with a private loan, the maximum length of time for which interest will be deferred is six months–and this only applies if the new lender agrees, so don’t count on it happening!

Repayment plans after consolidation

In most cases, consolidation keeps your repayment plan the same. You can still choose an income-driven repayment plan or a standard (10-year) repayment plan if you want to. You can also select a graduated or fixed payment schedule if that works best for you.

Consolidation application process

The consolidation application process is the first step to consolidating your student loans. You’ll need to fill out a form and submit it along with other required documents, such as your income tax returns. If you’re eligible for loan consolidation, your lender will send you a letter informing you of this fact and explaining what steps should be taken next to begin processing your request.

Once all of these things are done and approved by both parties (the federal government and lenders), it’s time for repayment!

The student loan consolidation process is explained.

A student loan consolidation is a financial tool that allows you to combine multiple federal and private loans into one new loan. Consolidating your loans can help you save money on interest, get better terms and conditions for repayment, and even take advantage of unique benefits like loan forgiveness programs or co-signer releases.

The first step in this process is applying for a new student loan consolidation through your lender of choice (which may be your current lender). Once approved by the lender, they will issue you one new consolidated payment each month instead of several separate ones–making it easier than ever before to stay on top of all those pesky bills!

Conclusion

With the help of this guide and our website, you should better understand how student loan consolidation works. We hope it can help you make an informed decision about whether or not consolidating your loans is right for you. If so, we encourage you to apply today!