Should I Consolidate My Student Loans? Heres What To . Should i consolidate my student loans

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Suze Orman's Advice for Consolidating Student Loans

There are two types of student loan consolidation: federal and private. Private consolidation is often referred to as refinancing. These processes are often confused, but they’re very different. Here’s how:

When you consolidate federal loans, the government pays them off and replaces them with a direct consolidation loan. You’re generally eligible once you graduate, leave school or drop below half-time enrollment. Consolidating your federal loans through the Department of Education is free; steer clear of companies that charge fees to consolidate them for you.

When you consolidate federal loans, your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next ⅛ of 1%. So, for instance: If the average comes to 6.15%, your new interest rate will be 6.25%.

Additionally, you’ll get a new loan term ranging from 10 to 30 years. Your repayment term will generally start within 60 days of when your consolidation loan is first disbursed and will be based on your total federal student loan balance, among other factors.

How to consolidate federal student loans

  1. Log in to and click on “Complete Consolidation Loan Application and Promissory Note.” You’ll need to finish the application in one session, so gather the documents listed in the “What do I need” section before you start and set aside about 30 minutes to fill it out.
  2. Enter which loans you do — and do not — want to consolidate.
  3. Choose a repayment plan. You can either get a repayment timeline based on your loan balance or pick one that ties payments to income. If you pick an income-driven plan, you’ll fill out an Income-Driven Repayment Plan Request form next.
  4. Read the terms before submitting the form online. Continue making student loan payments as usual until your servicer confirms consolidation is complete.
How to use income-driven repayment plans If you’re considering either federal or private student loan consolidation in order to get a drastically lower loan bill, look further into income-driven repayment instead.

The government offers plans that cut payments to 10% or 15% of “discretionary” income and offer forgiveness on the remaining balance after 20 or 25 years. You can sign up for free on

If you have a large loan balance and a low income, income-driven repayment is probably your best option for the lowest monthly bill fast auto payday loans

There are two types ofconsolidation loans. The type of consolidation loans available to you dependson whether you have federalor private student loans.

Ifyou have federal student loans, you have the optionto combine all or some of your federal student loans into a federalDirect Loan Consolidation. This option is only available toconsolidate federal student loans and not private student loans. 

Federal loanconsolidation will not lower your interest rate.  The fixed interest rate for a DirectConsolidation Loan is the weighted average of the interest rates of the loansbeing consolidated, rounded up to the nearest one-eighth of a percent. While consolidatingyour loans may slightly increase your interest rate, it will lock you into afixed-interest rate so your new payment won’t change.

If you have federalloans originated under the Federal Family Educational Loan (FFEL) program orthe Perkins loan program, you may be able to consolidate those loans into a newDirect Loan to qualify for PublicService Loan Forgiveness (PSLF).

You can learn more aboutwhat type of loan you have through the National Student Loan Data System(NSLDS), available at .This database only contains information about federal student loans.

Ifyou have private or federal student loans, you have theoption to combine all or some of your private student loans into one larger privateconsolidation loan through a private lender or bank.

If you are looking tolower your interest rate, lower your monthly payment by extending the repaymentterm, or seeking to releasea co-signer from your student loan, some borrowersin repayment with excellent credit may be able to refinance or consolidatetheir existing private student loans under a new private loan with a lowerinterest rate.

Youcan consolidate federal or private student loans into one private consolidationloan. Consolidating federal student loans into a private consolidation loan hasrisks.

Youshould weigh the benefits and risks of refinancing your federal student loaninto a private student loan with a lower rate, because changing from a federalto a private student loan eliminates some of these protections and benefits. 

If you have a secure job,emergency savings, strong credit, are unlikely to benefit from forgivenessoptions, then refinancing federal student loans into a private studentloan be a choice worthconsidering. 

Just remember that,under current law, once you refinance your federal loans into a private loan,you can’t turn your loans back into federal student loans or get any of thebenefits of the federal student loan program carson jewelry and loan  

Why Should I Consolidate My Student Loans - Frank FAFSA

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs.

There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee. These companies have no affiliation with the U.S. Department of Education (ED) or ED’s consolidation loan servicers. There’s no need to pay anyone for assistance in getting a Direct Consolidation Loan. The application process is easy and free.

Should I consolidate my loans
What types of loans can be consolidated
When can I consolidate my loans
What are the requirements to consolidate a loan
What is the interest rate on a consolidation loan
When do I begin repayment
Are there different repayment plans
How do I apply for a Direct Consolidation Loan
Whom do I contact if I have questions about consolidation

Should I consolidate my loans

The answer depends on your individual circumstances. 

What is the interest rate on a consolidation loan

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. There is no cap on the interest rate of a Direct Consolidation Loan.

When do I begin repayment

Repayment of a Direct Consolidation Loan will begin within 60 days after the loan is disbursed (paid out). Your loan servicer will let you know when the first payment is due. 

If any of the loans you want to consolidate are still in the grace period, you have the option of indicating on your Direct Consolidation Loan application that you want the servicer that is processing your application to delay the consolidation of your loans until closer to the grace period end date. If you select this option, you won’t have to begin making payments on your new Direct Consolidation Loan until closer to the end of the grace period on your current loans.

Are there different repayment plans

Borrowers have different needs, so there are several repayment plans—including income-driven repayment plans, which base your monthly payment amount on your income and family size. You’ll select a repayment plan when you apply for a Direct Consolidation Loan. Learn about repayment plans.

How do I apply for a Direct Consolidation Loan

You apply for a Direct Consolidation Loan through You can complete and submit the application online, or you can download and print a paper application from for submission by U.S. mail.

After you submit your application electronically at or by mailing a paper application, the consolidation servicer you selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.

Unless the loans you want to consolidate are in a deferment, forbearance, or grace period, it’s important for you to continue making payments on those loans until your consolidation servicer tells you that they have been paid off by your new Direct Consolidation Loan.

Whom do I contact if I have questions about consolidation

This depends on where you are in the consolidation process.

To ask questions about consolidating your loans before you apply for a Direct Consolidation Loan, contact the Student Loan Support Center at 1-800-557-7394.

To request technical assistance while you are signed in and completing the Federal Direct Consolidation Loan Application and Promissory Note online, select the “Contact Us” tab in the top menu bar of From there, you can either complete and submit the feedback form or select “Additional Information” and contact the Student Loan Support Center at the phone number provided.

To ask questions after you have submitted your Federal Direct Consolidation Loan Application and Promissory Note, contact the servicer for your new Direct Consolidation Loan. If you submitted your application online, your consolidation servicer’s contact information was provided at the end of the online process. If you submitted a paper application by U.S. mail, your consolidation servicer’s contact information was available when you downloaded or printed the paper application student loan forgiveness for nurses

Should I Consolidate My Student Loans A Complete Guide .

Do you find yourself asking “Should I consolidate my student loans” There are many reasons for and against consolidating student loans, and we will discuss them all in-depth below. First, let’s focus on whether you should consolidate your private student loans.

Should I Consolidate My Private Student loans

If you have good credit, a stable job and have already made at least a few student loan payments, you are a good candidate for refinancing and consolidating your private student loans, because you can probably get a better interest rate than you are currently paying.

Credit History For Consolidating

Right now, if you have good credit history, you can refinance and consolidate student loans at around 3% If that does not describe your situation, you may still be able to refinance and consolidate your private student loans if you have a cosigner with a good credit history. Before asking someone to cosign for you, however, find out how likely it is that they can be released from their obligation to repay your student loans when your credit improves. It is usually difficult to convince a private lender to release a cosigner. Of course, if you consolidate all your private student loans, you will have just one monthly payment for them, which can be easier for many people to manage than paying on several loans every month.

How Much Money Will Consolidating Save You

To answer the question, “Should I consolidate my student loans,” you need to have a good idea how much you could save. You can find this out easily and quickly by using our student loan refinancing calculator. You simply input your current student loan balance, your average interest rate and your loan term and then do the same for the new interest rate and loan term. Our calculator will immediately tell you your approximate savings and monthly payment. Say, for example, you currently have a balance of $25,000 at an average of 7% over 10 years. If you refinance and consolidate at 3% for the same term, you will save $5,864.32 and your monthly payment will be $48.87. Of course, many people refinance and consolidate in order to pay off their student loans in a shorter time period.

The key to whether or not you should refinance and consolidate your private student loans is whether or not your credit history (or that of your cosigner) will enable you to get an interest rate that is low enough to save you significant money and possibly also pay off your loans earlier if that is one of your goals. Paying off your loans earlier in addition to getting a lower interest rate will save you quite a bit of money.

Should I Consolidate My Federal Student Loans

There are two ways to consolidate your federal student loans. One is through a Federal Direct Consolidation Loan and the other is with a private lender.

Student Loan Consolidation through a Federal Direct Consolidation Loan

A Direct Consolidation Loan enables you to consolidate multiple federal student loans so you have only one monthly payment. There is no fee to do this, but your interest rate may be rounded up to the nearest 1/8th of a percent. You can apply for consolidation on the website.  Most federal student loans may be consolidated, but Direct Parent PLUS Loans cannot be consolidated with federal student loans given to the student.

Advantages of Federal Direct Consolidation Loans

There are both advantages and disadvantages to Federal Direct Consolidation Loans. On the plus side, you can simplify your life by consolidating all your federal student loans into one payment. You could also increase the period of time for repayment in order to lower your monthly payments. If you have loans that are not Direct Loans, consolidation may grant you access to income-driven repayment plans and the Public Service Loan Forgiveness program. Finally, if you have a variable rate and would like to change to a fixed rate, Federal Direct Consolidation Loan will enable you to do that. There is no credit requirement for federal student loan consolidation.

Disadvantages of Federal Direct Consolidation Loans

On the minus side of the ledger, if you consolidate, you might end up paying more in interest, because usually consolidation increases the repayment term. Be aware that you are only consolidating your student loans through a Federal Direct Consolidation Loan. You are not refinancing them. Your interest rate will be a rounded up, weighted average, and it’s not going to be better than your current rate.  You might also lose some benefits that you had with your original federal student loans, such as interest rate discounts, principal rebates or some loan cancellation benefits. If you are already making qualifying payments toward the Public Service Loan Forgiveness program or are on an income-driven repayment plan, you will lose credit for the payments you have made and have to start over. For example, for your student loans to be forgiven under the Public Service Loan Forgiveness program, you must make 120 payments. If you already made 30 and you consolidate, you will lose credit for those 30. Finally, once you consolidate your loans, there is no going back. Your federal student loans are paid off and only the Direct Consolidation Loan remains.

Best Reasons for Federal Loan Consolidation

So, should I consolidate my student loans These are good reasons to get a Federal Direction Consolidation Loan:

Consolidating Federal Loans With a Private Lender


Generally, it’s wise to consider consolidating your federal student loans with a private lender if you have a stable job, with a stable income, and you do not believe you can benefit from any of the student loan forgiveness programs.  For borrowers with financial stability as well as a good credit score, often the borrower will save many thousands of dollars by reducing their interest rate with a private student loan lender.  Federal student loans interest rates are determined by Congress and are not dependant on your credit score.  With the low-interest rates that have been around for a decade now, the rates charged for student loans by the federal government are much higher than whats offered in the private market.  Consolidating your federal student loans with a private lender could save thousands.


Federal student loans offer many more protections to the borrower than private student loans. Federal student loans offer options for deferment and forbearance that allow you to temporarily stop making payments or reduce your monthly payments for a period under certain circumstances such as military service or financial hardship. There are also programs where you may be able to have all or part of your federal student loan forgiven or discharged. These include the Public Service Loan Forgiveness program, the Teacher Loan Forgiveness program and death and disability discharges. Also, if you are having trouble repaying your student loans, you can take advantage of income-driven repayment programs. Though some private lenders are more lenient than others, none offer the same repayment options and flexibility of federal student loans. You may be able to refinance and consolidate your federal student loans at a lower rate with a private lender. But unless you have a crystal ball and know absolutely that you will not need the flexibility of federal student loan repayment and forgiveness programs, it is generally better not to refinance federal student loans with a private lender.

Should I Consolidate My Student Loans

In a nutshell, it can be very advantageous to consolidate private student loans if you can refinance them at a significantly lower rate at the same time. It can also be advantageous to consolidate your federal student loans via a Federal Direct Consolidation Loan if doing so gives you access to programs that will forgive some of your debt or offer you a more agreeable repayment plan. You do need to be aware that you could lose other protections by doing so. Consolidating your federal student loans with a private lender, however, is not usually recommended even if you can get better interest rates, because you must give up significant repayment options and advantages offered by federal student loans. You must carefully look at your own situation and weigh all the factors shared secured loan

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Loan Consolidation Federal Student Aid

What is consolidating loans It is a critical question that we need to answer before we get into further details such as how to consolidate student loans, the pros, and cons of consolidating loans, among other factors. It is important to note that consolidating loans refers to a way of combining various loans one has into one single loan granted by a financier who could be either private or federal institutions. Consolidating loans grants student a chance to integrate their multiple federal students loans they used I their higher learning into one loan that is paid on a monthly basis. It saves one from making multiple payments and instead focuses on making a single loan payment each month. Since a new financier finances the new loan, you will have time to negotiate new repayment conditions including interest rates and period of repayment. This is why consolidating loans is paramount for any person considering it.

Do you have many loans that seem to be a burden to you If you do, then thinking about consolidating your loans can be the smartest strategy you can devise. Many students often ask ‘is consolidating loans a good idea’ and ‘is it better to consolidate student loans rather than paying them separately’ Often, experienced financial professionals advise students to consider consolidating their student loans into one major loan that would be better and easier to manage.

If you are asking whether to consolidate your student loans, then it is the right decision you can make. All you need to do is find out how many loans are there in your borrowing history and make a formal arrangement with the financiers to assist you. You will be entitled to various advantages that will relieve you of any stress related to loan repayments.

The Most Effective Tips on How to Consolidate Student Loans

‘I want to consolidate my student loans. What company can I trust to consolidate all my loans for me’ These, among other concerns, are very common, especially from college and university students. Most of them may not be sure how loan consolidation occurs and which companies to trust for the refinancing and consolidation of their federal student loans. Thanks to our blog articles that educate students on various issues. We will enlighten you on ‘how and when should you consolidate student loans to your benefit’

While the process of consolidating students loan can be tiresome and confusing, doing a proper research and making informed decisions over the same can make work easier for students. There are various procedures involved to have your students consolidated. You don’t need to worry about consolidating your loans. The simple procedure entails:

The cons of consolidating student loans include high amounts paid at the end of loan servicing and the reduced ability to get financial aids from various financiers who may not want an applicant with a history of consolidation. Since these are rare and can be resolved, consolidating student loans remains a critical decision one can make. Since a married couple consolidate student loans later in life, a newly graduated person can have their students loans graduated as soon as they can too! Do not hesitate to have your student loans consolidated. Seek for your best financier now hmda reportable loans

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