A student loan, may it be a private or government student loan, is one helpful way of funding your college education. However, by the time you graduate from college, you’ll get your first taste of the real world by working hard towards repayment of your massive college debt. What makes loan repayment more difficult is if you’ve had multiple loans from multiple lenders, which means that you have to write more than one loan repayment check at a time. To help ease this burden a bit, you might want to consider applying for a student consolidation loan.
Also known as a student refinance loan, a student consolidation loan helps you to combine all your student loan debts into a single loan with only one lender and one system of loan repayment to make things easier for you. Here are some important guidelines to consider when applying for student consolidation loans.
- Determine thoroughly whether you really need a consolidation plan considering the type of educational loans you have secured. If you haven’t paid back a majority of your loans and you still owe a lot, then you really do need it. Evaluate and understand the rules that make you eligible for consolidation. It is important to note that federal consolidation of student loans is different from private student loan consolidation. Private student loans have relatively higher interest rates and cannot be deferred, while federal student loans don’t require a fee when you apply for them. They generally have lower and fixed interest rates, and can be deferred in case the borrower is undergoing a financial emergency. If you have both kinds of loans, you would need one separate type of consolidation system for all federal loans and another for all private loans. It is also helpful to consider consulting with a personal financial adviser, especially when some policies and terms get a bit confusing or unsure for you.
- Gather all information related to your student loans. These include the company or student loan lenders' names, the interest rates for the loans and the terms. What’s important is to track down each and every one of your lenders. However, some may be difficult to track, so this job now falls to your chosen lender.
- Scout for student loan lenders and companies open for consolidation. Many banks, credit unions, and the US Department of Education offer this service. Some companies and third party student loan consolidators have also gone virtual and are now expanding their services online. But before accepting their services or providing any kind of personal information, scrutinize them first to avoid being caught up in scams. If you’re out of ideas, you can also try checking with your initial lenders. Compare them and choose one you think offers the best, practical deal for you. What’s important here is that you should consider a company or agency that offers a student loan repayment system that you can afford and strictly adhere to. You can choose one that offers the shortest term, or if you think you can’t keep up with that, you can choose one that offers the lowest interest rate possible. You can also ask for the weighted average of your interest rates, because some companies use this as the basis for the new interest rate of all your compiled student loans.
- Once you’ve chosen your lender, you’re required to sign an application form and a permission slip that authorizes your new lender to verify all your loan accounts. You also have to provide all relevant information and records regarding all your student loans. Then begins the task of consolidation, and all your lenders will be contacted.
- If in the event that your loans were for your undergraduate degree, or you’ve been discovered to have a bad credit record, you will need to have a cosigner before you clinch the deal with your chosen lender. If it’s for a graduate school loan, you won’t need one.
- It is important to learn how to manage your funds properly so that you would always get to pay in full and on time every month. To maintain a clean and reliable financial record, you should also follow consolidation rules and requirements to the letter.
Student consolidation loans would help save you more money and time, and all the trouble of going after all of your lenders. Just keep in mind to be practical and search thoroughly for the best deal that you can afford.