Apply For Student Loan Consolidation – If you’re dealing with multiple student loans, you can consolidate them into one loan with a fixed interest rate based on the average interest rate of your existing loans to help pay off your debt. The idea is to make student loan debt easier to manage and possibly cheaper if done right.
There are two types of student loan consolidation that are often confused but are very different: student loan consolidation (for federal loans) and student loan refinancing or private student loan consolidation.
Apply For Student Loan Consolidation
Federal student loan consolidation is when you take multiple federal loans and combine them into one federal loan. This is done through the Department of Education’s Office of Federal Student Aid. Your new loan, instant consolidation loan, is free. Instead of making monthly payments, you have monthly payments.
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Student loan financing is done through private lenders. If you have federal and private student loans and want to consolidate them into monthly payments, refinancing may be an option for you. By refinancing, you agree to a fixed or variable interest rate that must be lower than the individual interest rates on each existing loan.
You can’t transfer your personal loan to the federal government, but you can consolidate your personal and federal loans through a private lender. When a federal loan is included in a refinance, you lose repayment options and forgiveness programs such as deferment and forbearance.
A temporary deferral suspends the payment of a loan under certain circumstances. The subsidized portion of a direct consolidation loan generally does not earn interest during this period. Patiently stop or reduce debt payments for a while.
There are no credit requirements for federal student loan debt consolidation. But only federal loans can be consolidated this way. This may be a good option for you if:
Your Guide To Student Loan Consolidation
By consolidating or refinancing your personal student loans, your financial history will come into play with new interest rates. Your financial history includes your credit score, income, work history and educational background.
You usually need at least a good credit score to qualify. Interest rates can vary from 2% to 13%, depending on the lender and whether the rate is fixed or variable.
The private student loan consolidation process depends on the lender. But online lenders usually offer online applications that take 10 minutes or less to complete and responses within minutes.
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Many college graduates still wonder if it is worth going to school at all, given the economic trends of the last 25 years. In the past, a college degree was enough to guarantee you a good job.
Now graduates struggle to start a career and sometimes settle for just walking in the door.
You still have debt even if you haven’t completed your college degree or found a high-paying job.
Just a reminder if you hate the program, the professor, the school, or the mascot. You have signed on the dotted line and are now responsible until your debt is paid off.
What Is Student Loan Consolidation?
If debt on top of debt is staring you down, it may be time to consider student loan consolidation.
Student loan consolidation is when you take out a new loan that pays off your existing student loan. In this process, you simplify from multiple payments and service providers to just one monthly payment.
With federal student loans, you take out a new federal loan through the Department of Education. That makes you one monthly payment and one loan that covers all the loans you took out while in school.
Interest is based on a weighted average of your combined loans. Note that the fixed interest rate may differ from the 8% rate that applies to most federal student loans. It can be higher or lower.
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Private student loan consolidation is also called refinancing. If you qualify with a private lender, you can roll your existing loans into one new loan while lowering your interest rate and saving money.
Federal and private loans cannot be combined into a new loan with the Department of Education. However, you can do this with a private lender.
(Note: “Should I consolidate my student loans?” is a question we get asked all the time here. That’s why we’ve put together this simple guide, which you can download for free, to help you figure out if student loan consolidation is the right choice for you. Click to learn more here.)
Student loan consolidation is the creation of a new federal student loan with the Department of Education paying off and combining all of your existing student loans into one loan.
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Consolidating won’t save you money on your loan, but it can give you access to a repayment plan or forgiveness plan.
On the other hand, student loan refinancing is a financial choice you make when you work with a private lender.
You can take advantage of lower interest rates and potentially consolidate your federal and private student loans. Refinancing can save you money.
If you combine federal and private loans in the process, you lose access to federal protections and repayment options.
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When you apply for refinancing, all of your financial history will be considered and used to determine your interest rate.
Because interest rates are fixed based on averages, direct loan consolidation may not save you as much money as consolidating all your loans into one easy payment because…
Also, if we’re being honest, when debt exceeds income, we get depressed, pretend it doesn’t exist, eat ice cream and watch Netflix.
Because refinancing is only available through a private lender, you will lose the federal benefits that come with the loan.
Student Loan Refinance And Consolidation Guide
But refinanced loans have different terms and you may be able to negotiate a lower interest rate.
I recommend going through the credit union or looking for someone to start playing the ball. They prefer to kiss your behind when negotiating your business.
Talk to several credit unions and see who offers the best terms. Of course, this is based on your income and credit score, so stop applying for credit cards.
Many graduates leave school with at least one loan each year. If you’re struggling to keep track of your monthly payments, consolidation is a great way to combine multiple monthly bills into one.
Student Loan Refinancing Vs. Consolidation: What’s The Difference And Which One Should I Choose?
If your payments are more than you feel, consolidation can allow you to extend your repayment period and reduce your monthly costs.
(Bonus tip: Want a complete guide on whether you should consolidate your loans? Here are the 17 most important factors that will help you decide whether you should consolidate your loans. Click here to learn more and get your free guide.)
Consolidation may seem like a no-brainer, but it’s not for everyone. There are some disadvantages depending on your situation.
When consolidating, you can eliminate certain loans from the consolidation loan. For example, if you are working with a Public Service Loan (PSLF) for a Direct Loan, you must exclude the Direct Loan from the consolidation to avoid losing the forgiveness benefits.
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(Did you know? Consolidation can lower your payments, shorten your debt, offer forgiveness benefits, and count against high-interest loans. Find out if you should consolidate your federal student loans with our comprehensive 17-page guide to the most important factors. . For more information and a free guide, click here.)
If you fall behind on federal debt, the government can start garnishing wages (15% of your wages) without you being able to file a lawsuit. Personal lenders will have to take you to court before they can pay your wages. Consolidation offers you one option to stop paying wages:
Yes, student loan consolidation can lower your payments. You can choose a repayment term that reduces your payments, choose an income-based repayment plan, or refinance with a private lender and get a lower interest rate.
Federal student loan consolidation does not lower your interest rate. Private student loan refinancing can lower your interest rate if you qualify — and you can consolidate your federal loan with a private lender if you want.
How To Consolidate Federal Student Loans Into One Monthly Payment
USSLC has numerous 5-star ratings for customer service, efficiency and ability to expedite the process. Loan servicers are rarely interested in working with you to save money; you are just another number to them. USSLC can be contacted by phone at
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