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What is the procedure for consolidating my college loans?

I have already completed my undergraduate studies. I have recently got a stable job and plan to start my loan repayment next month. I am looking for information on both private student loan consolidation and federal student loan consolidation.

I had to take private college loans in addition to the federal loans as I had to make ends meet in college. However, I cannot afford to pay them individually. This is how I have arrived at the option of consolidation. I would also really like to know about student loan consolidation rates.

Samantha Stevenson

in Student Loans

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Victoria Fowler on March 21, 2018

Taking a student loan to finance college studies is usually the only available option for most students. Scholarships and grants are usually limited and therefore, most students finish college with huge debts.

It is great that you have already settled in a stable job. By choosing a good repayment, you will not face the severe penalties of defaulting a college loan. Consolidating loans is the practice whereby a lending institution pays off all your student loans and gives you a new loan of the combined total debt.

Several federal student loans can be consolidated through the Direct Consolidation Loan offered by the Government. With this new loan, the interest charged is fixed and is arrived at by calculating the interest rates of all the loans under consolidation. However, the loans must be in the grace period or under repayment.

The procedure for applying federal student loans consolidation:

  1. Visit the federal student aid website and fill the Direct Loan Consolidation application. You require the federal student identification given when you first applied for your federal loan. The process does not cost anything.
  2. Select the loans you intend to consolidate plus each loan servicer.
  3. Choose your preferred repayment option. In this section you state if you will be making a monthly payment or otherwise.
  4. Review the stated terms as well as conditions that come with the loan. Make sure you completely understand these requirements, as this new loan is an important financial responsibility you are accenting to. After you are satisfied that all the information you have provided is accurate, sign it.
  5. Send your completed application through the mail or electronically.
  6. Wait for approval. You will know if you direct loan has been approved when a consolidation servicer communicates with you. They will be responsible for the steps that follow.

If you want to consolidate a private and federal loan, consult a private refinancing lending agency. This is because Direct Consolidation Loans cannot consolidate them. The procedure is almost similar to that of private loans.

The procedure for consolidating private student loans:

  1. Search and compare the different refinancing companies. Look for one with lowest student loans consolidation rates and flexible repayment plans.
  2. Check the eligibility criteria. This includes credit score and employment requirements. Private institutions usually need to do a credit check before giving you any loan.
  3. Apply.

Larry Warrena year ago

Consolidating college loans is the best repayment option you will get if you have several loans. However, you need to consider the downside of consolidating your loans. For example:

  1. You will end up paying more accumulated interest: this is because you will be paying the same amount of interest (could be a bit higher than the actual average) for an extended period.
  2. You will take a longer time to complete your loan: consolidating means you combine your loans and increase the payment period to accommodate the smaller payments you will be making.
  3. Lose of individual loan benefits: any benefits offered by individual loans become invalid.
  4. Lose any grace period that is left: when you consolidate your loan, you are expected to start on your monthly repayments after a 2-month period after approval. This does not take into account the 6-month grace period.


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