Basic Questions for Student Loan Consolidation

There may come a time when you may need to pool your resources when it comes to your student loans. This is called Student Loan Consolidation, this is a process where you take your student loans and parental loans and combine them together. This is just like loan consolidation for regular loans. The way this works is that you combine your loans with one lender and then they are used to pay off the balance on any other loan. If you have the loans from Stafford, PLUS and Perkins Loans, then you will be able to consolidate.

What are the interest rates on Consolidated Loans?

Once you have decided to consolidate your student loans, you will have a new interest rate. The rule of thumb is generally 1/8 of a percent of the amount owed but there is some good news. There is a cap of about 81/4%. If you have several different loans then you will have an interest rate that is averaged together. For example, if you have loan for $ 15,000 in consolidated loans then the $ 5000 of that will have a 5.0% and the 10,000 has a 6.8%, you will have a consolidated interest rate of 6.2%.

Are there any additional costs if I Consolidate my loans?

The only change to any costs you may have is the increase of the interest rate when you decide to consolidate. There are absolutely no fees when you consolidate your loans. If there any fees then you should contact a different company for consolidation. Do some comparison research and see which companies offer no additional costs. Those who do, stay away from those. The only other cost may be the fees of the education loans themselves.

Who is Eligible for Consolidation?

If you are a student or the parent of a student who has taken out a loan then you are eligible for consolidation. If you are a married couple with student loans, then you cannot combine your loans together. You can only consolidate loans that are in your name. As a student you can only consolidate your loans during the grace period of the loan or after the loans start into the phase of repayment. Parents who have taken out student loans can consolidate their PLUS Loans at any time.

How Do I Choose a Lender to Consolidate With?

You have the freedom to consolidate your loans with any lender. This includes a lender that holds all of your loans. In this case, the lenders may require a minimum balance before they will consider consolidating your loan. Some lenders may require a debt balance of $ 5,000 and more, other balances may be higher.

When you encounter some problems with repayment because you have more than one loan, you have the choice of consolidation. With this program, you will have one payment and it will satisfy your loans requirements. If you start to fall behind on your payments or when you graduate and you don’t have the means to make payments then talk to a lender about consolidation.