Student Loan Consolidation Information for Private and Federal Loans
Student loan consolidation can be a smart financial decision for post graduates with multiple education loans.
Consolidating private and federal college loans can reduce interest rates and monthly payment amounts and help borrowers maintain a good credit rating.
The primary reason people enter into student loan consolidation is to obtain one monthly payment. This is especially beneficial for law and medical school graduates who hold numerous student loans.
After graduation it can be challenging to manage three or more monthly loan payments. Students must establish a budget to accommodate each college loan payment and keep track of multiple payment dates. Submitting late payments will result in delinquency fees and can lower FICO scores.
Although consolidating college loans can be financially beneficial, there are many factors to consider. It is best to work with a financial consultant or conduct research to learn about the advantages and disadvantages of college loan consolidation. The Internet provides a wealth of resources to help graduates learn about consolidating loans and to compare loan options and interest rates.
It is important to note that while subsidized and unsubsidized student loans can be consolidated together, lenders are required by law to monitor payment transactions.
In essence, lenders provide two loans to separate subsidized and unsubsidized payments. However, borrowers will only have one payment for both loans.
In order to consolidate federal student loans, post graduates must meet lending criteria. Borrowers are required to wait six months from the date of graduation; pay three loan payments in full; and be current on all loan payments before applying for a consolidation loan.
Graduates who obtained financing through SallieMae are required to obtain consolidation financing through conventional lenders.
In the past, Congress made legislative cuts to SallieMae loans which caused the private lender to suspend participation in the federal loan consolidation program.
Students with SallieMae college loans can consult with a repayment specialist to determine if other payment options exist. Details of student loan payment programs are presented at SallieMae.com.
Consolidating education loans is similar to mortgage refinancing. Borrowers apply for a new loan and use funds to pay off all other college loans. Most federal and private loans can be consolidated including: Direct Loans, Guaranteed Student Loans, Health Professional Student Loans, Perkins and Stafford.
Graduates with Direct Loans can apply for consolidation through LoanConsolidation.ed.gov. This government sponsored student loan consolidation option is a good choice for students with low FICO scores or credit blemishes because applicants are not submitted to credit checks.
Post graduates should also investigate loan consolidation alternatives such as tuition deferment, forbearance programs, and student loan forgiveness. Debt forgiveness programs are available to students who hold degrees in education, law, medical and other fields of public service.