Student Loan Consolidation
Student Loan Consolidation is the process of taking one or more student loans and refinancing the loan to make the payments lower. It is especially effective for borrowers that have multiple loans and can no longer afford the big payments.
Benefits Of Consolidating Student Loans
There are many benefits to consolidation:
- Combine everything down to one payment (monthly), and one lender
- Reduced monthly payments
- No maximum or minimum loan amounts
- Flexible repayment options
- Possibility of deferment options
- Subsidy benefit retention
2 Types Of Consolidation Loans
FFEL Consolidation & Direct Consolidation are the two types available. Borrowers should consult with their loan holders or servicers to find out exactly what options are available.
Who Is Eligible To Receive A Consolidation?
Any person who has a direct loan or a FFEL (Federal Family Education Loan) that is in default, deferment, repayment, or grace may qualify for a consolidation. (In school status loans will not qualify for a consolidation.)
Consolidation Of Existing Consolidation Loans
There are strict conditions where an existing consolidated loan can be consolidated. First, the borrower must include an additional loan not already included in the original consolidation. Second, a single Federal Consolidation Loan can be consolidated if the loan is in default status or has been submitted to a guaranty agency for default relief by the loan holder. Third, a single Federal Consolidation Loan can be consolidated if the borrower intends to apply for loan forgiveness under the Public Service Loan Forgiveness Program.
Is Consolidation The Right Choice?
In most cases, choosing to consolidate student loans is a great choice. It can save the borrower from defaulting on the loans and destroying their credit. Attaining a lower monthly payment on student loans can greatly relieve stress and create a better financial atmosphere for any borrower that is serious about doing so.
