If you are like the average college student, you more than likely took out some type of student loan to pay for some or all of your college education. Whether you graduated or not is a different story. However, regardless of your matriculation status, you are still responsible for paying those loans back once you are no longer actively pursing a qualifying higher education. Depending on the total amount of loans you took out and what type of student loan, federal or private, you may be burdened with making multiple payments in a single month to multiple lenders. These loans might also be a further burden because of the often high and sometimes variable interest rates they carry. If any of this applies to you, read on and learn why loan consolidation just might be right for your personal situation.
Student loan consolidation is the process of refinancing of all your student loans into a single loan with a single loan provider. If you have federal student loans, you can consolidate them with the federal government by taking advantage of their direct loan consolidation process. If you have private loans, you will have to find a lender who participates in private loan consolidating and apply for consolidation with them. Over the last couple of years, the government has passed legislation that has made it less appealing for companies to participate in the loan consolidation business so the list of loan consolidators has since shortened.
Despite the shortened list, the advantages of student loan consolidation have not changed. If you are wondering if student loan consolidation is for you, here are some of the symptoms or issues people face when they decide to consolidate their student loans. Ask yourself:
Are you having trouble meeting your monthly payments?
Have you exhausted your deferments or forbearance options?
Are you struggling to avoid defaulting on your loans or have you already defaulted?
Do you want the convenience of a single payment?
Is the variable rate on your loans making it difficult for you to keep up?
If you answered yes to any of these questions, consolidation just might be the answer you are looking for. Some of the benefits of consolidation include:
You can combine one or more loans with a single lender with one monthly payment
Flexible payment options that change with your circumstances
No minimums and no maximums
Additional deferment and forbearance options
Lower monthly payments and a lower fixed interest rate
The overall consolidation process is relative easy. Once you have identified the consolidation source, you will then go through the process of inputting all of your loan information into their system including contact information for your lenders. This information can easily be obtained by reviewing your most recent loan statement. The loan consolidator will verify your loan information and determine whether or not they will approve you for consolidation. Once you are approved, they will pay off all of your student loans and create a new loan agreement between you and them. You will also be required to sign a new promissory note with your new lender (or old) which will outline the payment terms and certify your intent to pay it back.
Congratulations, you have consolidated your student loans!