For those asking the question of how to consolidate student loans that have either a vague or zero understanding of how the consolidation process works, well to make it simple consolidation is when you basically group together all of your loans, student loans in this case, and only pay one payment on the total sum of all your student loan debt. The simple act of consolidation will not only provide you with the benefit of only having to pay one monthly payment to one lender, it can also lower your interest rate as your interest reate will be around the average of all the loans interest rates that you are consolidating, as well as lower the monthly payment.
Lower payments are always great but they come with a price, which the lower payment will mean an extended repayment period which will both keep you in debt longer as well as you will pay more over the life of the repayment compared to paying to off with a shorter repayment term. But the good thing about having a longer repayment term is that it will give you time to get a job while you have a low monthly payment, then start paying larger payments when you afford it, where consolidation companies usually allow you to do so without penalty. Before we get into answering the question how to consolidate student loans in it’s extent, it should be known that you can actually consolidate just one loan and still enjoy the benefits of consolidation.
Another aspect of answering your question of how to consolidate student loans is the part that for the most part, federal student loans and private student loans need to be consolidated seprately. These consolidation loans are granted in the form of both secured and unsecured loans, and once they are given your credit score can actually go up as all of your student loans will be paid off by the consolidation company, which will show up as mutliple loans paid off, bumping up your score.
All in all the act of student loan consolidation can provide you with immense value, especially for those nearing student loan default as it can keep you from having to default on your student loans because you cannot afford the monntly payment. If you are in this situation then a lower monthly payment that is offered through consolidation companies can help you avoid many negative things.
Private Student Loan Consolidation
Now when it comes to how do you consolidate student loans, well there are two distinct ways, those being either through a private consolidator for those with private loans like through Sallie Mae or Next Student who are both some of the largest private student loan consolidation providers. To get started with the process of private student loan consolidation, the best thing to do is contact providers directly who can get you going on the process of consolidating your student loans.
Federal Student Loan Consolidation
Or for federal student loan debt, one would use the Federal Student Loan Consolidation Program which is provided by the Higher Education Act (HEA) where they provide student loan consolidation services for federal loans. If you are ready to utilize federal student loan consolidation then you should visist the Direct Consolidation Loans site which can provide you with value information, answering any more of your how to consolidate student loans questions and lend a helping hand to consolidating your student loans.
Drawbacks of Student Loan Consolidation
Now that you known the major aspects of what student loan consolidation entails, there are a few speed bumps that you may encounter, the keyword being “may” because there is a good chance that the process will go smooth. But for examples purposes, below are some of the negative aspects:
- Consolidating your student loans can actually make you ineligible for certain student loan forgiveness and relief programs.
- Certain loans are often not excepted when it comes to federal loans as well as loans that were obtained before a certain date.