Consolidating your student loans is one way to reduce monthly payments and ease the burden of student loan debt. Student loans are a necessity for many people seeking higher education. It’s easy not to think about the debt you’re accumulating while still in school, but once you graduate those payments become a reality. Both federal and private student loans may be eligible for consolidation. You can consolidate at any time after graduation; however, deadlines for getting the lowest available interest rate or staying ahead of changing regulations will be a consideration.
Weigh the Risks and Benefits
Student loan consolidation can save you hundreds of dollars a month. Paying only one bill each month saves time and eliminates the possibility of accruing late fees because you were confused about which loan payment was due when. With consolidation it will always be clear when your payment is due, how much the payment is and what you interest rate you’re paying. And with a fixed interest rate you need never worry about fluctuations in the market increasing your monthly payment.
On the downside, loan consolidation can extend payments for as long as 30 years. The long repayment period means a low monthly bill, but overall interest rates could add a significant amount to your total. Make sure you understand the terms of the loan and are prepared to abide by them.
Find a Reputable Consolidation Program
There are many companies that offer student loan consolidation. Banks and other private lenders are available to consolidate private loans. Visit the Federal Student Aid website to consolidate federal loans. Perkins loans, HEAL loans, Federal FFELP loans and Federal Stafford loans, Guaranteed Student loans, and some others are all eligible for consolidation under the FSA program.
Gather Your Documents
Before filling out an application for student loan consolidation, take a moment to get organized and gather your necessary documents. You may need:
* Your FAFSA pin number
* Account statements
* Loan records
* Monthly bill statements
* Proof of income
File the Application
Carefully read any documents that are included with the application packet. You may be asked to select a repayment plan in order to complete the application. If so, use a loan repayment calculator, available at the FSA site, to help decide which plan is best for you. Complete and file your application online or by mail.