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What You Should to Know about Student Loan Consolidation. The Consolidation Loan combines several student or parent loans into one larger loan than a single lender, which is then used to repay other loan balances. They also provide opportunities for alternative payment plans, making monthly payments more manageable.
Consolidated loans are available for most federal loans, including Stafford, PLUS and SLS, FISL, Perkins, Student Professional Health Loans, NSL, HEAL, Student Guaranteed Loans and direct loans. Some of the lenders also offer private consolidation loans for private education loans. Some lenders, like credible. offer a personal consolidation loan.
For example, suppose that a student has just lent unsubsidized Stafford Loans originating on or after July 1, 2006. The fixed interest rate of this loan is 6.8%. When they are consolidated themselves, a consolidated loan will have an interest rate of 6 and 7/8 percent, or 6.875%. So the interest rate only increases a little.
If the borrower has a mixture of loans with different interest rates, the weighted average will be between the two. For example, if the borrower has $5,000 Perkins Loans (5.0%) and $ 10,000 from unsubsidized Stafford Loans (3.86%), the weighted average is ....
This weighted average, 4.2%, is rounded to the nearest 1/8 percent, resulting in a consolidated loan interest rate of 4.25%.
If you consolidate loans with different interest rates, the weighted average interest rates will always be in between. Don't be fooled if someone tries to suggest that this will save you money by giving you a lower interest rate. Interest rates may be lower than your highest interest rate, but also higher than your lowest interest rate. More importantly, the amount of interest you pay during the loan period will be almost the same.
In any situation, there is no need to pay upfront fees to get a federal education loan or consolidate your federal education loan. There is no fee to combine your loan. While other federal education loans, such as Stafford loans and PLUS, can burden some costs, costs are always deducted from the disbursement check. There is never an upfront fee. If someone wants you to pay upfront costs, it's likely an example of a down payment loan fraud.
Students can consolidate their education loans only during the grace period or after the loan enters repayment. Loans that fail to pay but with satisfactory payment arrangements can also be consolidated. Students can no longer consolidate when they are still in school. However, parents can consolidate PLUS loans at any time.
You can consolidate consolidated loans only once. To consolidate an existing consolidated loan, you must add a loan that was not previously consolidated to a consolidated loan. You can also combine two consolidated loans simultaneously. However, you cannot consolidate a single consolidation loan by itself.
Note that when you consolidate a consolidated loan, the loan will not be charged back to the consolidated loan. The consolidated loan is treated as a loan with a fixed interest rate in the formula for the weighted average interest rate used to calculate the interest rate for a new consolidated loan.
Consolidated loans often reduce the size of monthly payments by extending the term of the loan beyond the standard 10-year payment plan with a federal loan. Depending on the number of loans, the loan term can be extended from 12 to 30 years. Reducing monthly payments can make loans easier to pay for some borrowers. However, by extending the term of the loan, the total amount of interest paid during the loan period increases.
You don't need to choose an alternative payment plan. We recommend staying with a standard ten-year payment, because that will save you money. Alternative payment plans may have lower monthly payments, but this increases the loan term and the total interest paid during the loan period.
The repayment of the consolidation loan will begin within 60 days of loan disbursement, unless the borrower is eligible for delay or patience.
Consolidated loans are available for most federal loans, including Stafford, PLUS and SLS, FISL, Perkins, Student Professional Health Loans, NSL, HEAL, Student Guaranteed Loans and direct loans. Some of the lenders also offer private consolidation loans for private education loans. Some lenders, like credible. offer a personal consolidation loan.
Student Loan Consolidation
Interest rate
The interest rate for a consolidated loan is the weighted average of the interest rates for a consolidated loan, rounded to the nearest 1/8 of the percent. The interest rate is determined for life.For example, suppose that a student has just lent unsubsidized Stafford Loans originating on or after July 1, 2006. The fixed interest rate of this loan is 6.8%. When they are consolidated themselves, a consolidated loan will have an interest rate of 6 and 7/8 percent, or 6.875%. So the interest rate only increases a little.
If the borrower has a mixture of loans with different interest rates, the weighted average will be between the two. For example, if the borrower has $5,000 Perkins Loans (5.0%) and $ 10,000 from unsubsidized Stafford Loans (3.86%), the weighted average is ....
This weighted average, 4.2%, is rounded to the nearest 1/8 percent, resulting in a consolidated loan interest rate of 4.25%.
If you consolidate loans with different interest rates, the weighted average interest rates will always be in between. Don't be fooled if someone tries to suggest that this will save you money by giving you a lower interest rate. Interest rates may be lower than your highest interest rate, but also higher than your lowest interest rate. More importantly, the amount of interest you pay during the loan period will be almost the same.
No Consolidation Fee
Apart from a slight increase in interest rates on a consolidated loan, there is no fee to consolidate your loan. There is no fee for consolidation.In any situation, there is no need to pay upfront fees to get a federal education loan or consolidate your federal education loan. There is no fee to combine your loan. While other federal education loans, such as Stafford loans and PLUS, can burden some costs, costs are always deducted from the disbursement check. There is never an upfront fee. If someone wants you to pay upfront costs, it's likely an example of a down payment loan fraud.
Who Can Be Consolidated?
Parents and borrowing students can consolidate their education loans. Students and parents cannot combine their loans through consolidation, because only loans from the same borrower can be consolidated. But they can consolidate their loans separately.Students can consolidate their education loans only during the grace period or after the loan enters repayment. Loans that fail to pay but with satisfactory payment arrangements can also be consolidated. Students can no longer consolidate when they are still in school. However, parents can consolidate PLUS loans at any time.
Which loans can be consolidated?
Any federal education loans can be consolidated. You can even combine one loan. However, there are some limitations to consolidated loan consolidation.You can consolidate consolidated loans only once. To consolidate an existing consolidated loan, you must add a loan that was not previously consolidated to a consolidated loan. You can also combine two consolidated loans simultaneously. However, you cannot consolidate a single consolidation loan by itself.
Note that when you consolidate a consolidated loan, the loan will not be charged back to the consolidated loan. The consolidated loan is treated as a loan with a fixed interest rate in the formula for the weighted average interest rate used to calculate the interest rate for a new consolidated loan.
Repayment Package
The consolidated loan provides access to several alternative payment plans in addition to standard ten-year payments. This includes long-term payments, gradual payments, payment of income contingencies (only Direct Loans) and income sensitive payments (specifically FFEL). If you do not specify payment terms, you will receive a standard ten-year payment.Consolidated loans often reduce the size of monthly payments by extending the term of the loan beyond the standard 10-year payment plan with a federal loan. Depending on the number of loans, the loan term can be extended from 12 to 30 years. Reducing monthly payments can make loans easier to pay for some borrowers. However, by extending the term of the loan, the total amount of interest paid during the loan period increases.
You don't need to choose an alternative payment plan. We recommend staying with a standard ten-year payment, because that will save you money. Alternative payment plans may have lower monthly payments, but this increases the loan term and the total interest paid during the loan period.
The repayment of the consolidation loan will begin within 60 days of loan disbursement, unless the borrower is eligible for delay or patience.
What You Should to Know about Student Loan Consolidation.
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