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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS · Main Page · Auto Loans · Home Equity Loans · New Mortgage Loans · Refinance Loans · Student Loans  Loan Consolidation Private Loans Tips and Advice Calculators· Debt Consolidation · Credit Report & Score · Tips & Advice - New! · Calculators - New! · Loan Glossary · Loan FAQ · Info & Resources :: CELL PHONES :: INSURANCE :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Student Loans Tips and Advice Center Topic: Student Loan Consolidation Explained See the subtopics menu for tips and advice about student loan consolidation. For additional information about student loans, see the topic list directly below.
 Consolidation is Just Another Word For LoanIsn't a student loan consolidation the same as getting another loan? For some people, student loan consolidation might make perfect sense. For others, it might not. For example, if you only have one or two loans, consolidating them might not make much of a difference in your interest rate, or your overall monthly payments. However, if you've got several loans floating around, both federal and private, it's probably in your best interest to consider researching student loan consolidation lenders. Good student loan consolidation programs will not charge you for information packages, will not charge you to apply for consolidation, and should be happy to offer free, unbiased financial suggestions. Keep this in mind when researching possible lenders. While it's true that consolidating your student loans is really just creating another loan, it can bring many benefits. The consolidation process generally simplifies repayment of student loans and can save you money by reducing interest rates and monthly payments. Student loan consolidation can be beneficial in many ways, including helping you build a positive credit history while, at the same time, making the overall process of repaying your loans easier and more cost effective. For most students who had to take out loans to pay for school, it is highly recommended to at least consider student loan consolidation and research available options after graduation. ^ Back to top Take Inventory of Your Student LoansWhat should be my first step before examining student loan consolidation services? Congratulations! You're a graduate now, so it's time to start making some big decisions. One of those decisions revolves around what to do about your student loans. You can always choose just pay the minimum balance on each and every loan, or you can do yourself a favor by consolidating all of your loans and making one payment. Before looking into consolidation, make sure to take an inventory of all your student loans. Researching for good student loan consolidation information can come later. No doubt you've been buried under your student work load and haven't really kept track of all of the loans. Good news: For all of your federal loans, you can search the National Student Loan Database System (NSLDS). For your own security, you'll be asked to provide unique identifying information such as your Social Security Number. ALso, just like using an ATM, you'll also be required to obtain a PIN number. If you don't already have one (issued at the time of your federal student loan allotment), you can easily get one at the Federal Student Aid Web site. Once you have your PIN number, you can easily log on to the Web site to view information on loan and/or grant amounts, outstanding balances, loan statuses, and disbursements. Once you have a solid idea of what your loans look like, and what you owe, you can move on to creating a realistic budget. ^ Back to top Budget Basics - Making the Most of Student Loan ConsolidationHow can I figure out if I'll be able to pay back my student loans? Are you sure your monthly loan payments aren't going to exceed what you can realistically pay? If you've already got a job lined up, sit down with a budget sheet to make sure you will not be coming up short. Keep it simple and create a list of every conceivable expense you'll typically have in a one month period. Make sure to leave some money in the "miscellaneous" slot for unexpected expenses, repairs, gifts, etc. Assuming you already have a job, or will have one soon, what will your one-month take home pay be? If you're not sure, come up with a rough estimate. Now, add up the total of each student loan monthly payment. That's going to be a fixed expense for a long time to come. Make sure to add that to your budget. Now, do the math. Coming up short? If so, you should probably consider student loan consolidation. The interest rates will be better and you'll end up paying one monthly payment instead of several. Besides being more convenient, it can end up saving you money, too. After all, you don't want to starve in order to pay off your loans. ^ Back to top Application Accuracy For Student Loan ConsolidationWhat kind of questions will I have to answer on a student loan consolidation form? Forms can be tedious and reports can be mind-numbing. You've just graduated from college and you're probably ready to scream if you see just one more form or report. Bad news...there's (at least) one more form for you to fill out. As frustrating as it may be, don't rush through the student loan consolidation process. Whether you complete consolidation online or the old-fashioned way with a pen and paper, make sure to fill it out as accurately as possible. When applying for student loan consolidation, you'll be asked to provide a number of things, including:
The above list is only a general guideline, but it gives you an idea of some of things you'll be asked. When you apply, you'll usually have the choice of receiving an application and information packet online or through regular mail. Your packet should contain information about all aspects of consolidation, including details on how your interest rate is computed. Remember, you shouldn't have to pay to receive an information package. You should be able to obtain any information that you may need free of charge. Take your time, read through the application before starting, and never hesitate to seek answers to any questions that arise. ^ Back to top Don't Stop Paying Until the Ink is DryCan I stop making my student loan payments if I've received approval from the student loan consolidation lender? You've researched a variety of student loan consolidation services, completed the applications, signed the promissory note, and just received notification that you've been approved for financial aid consolidation. The hard part is over. Now you can breath a little easier knowing that your interest rates are locked in (no surprise increases) and that your monthly payments are going to be manageable. Two months go by and you haven't made any payments. After all, you haven't heard anything from student loan consolidation lenders. Everything must be fine, right? Wrong. You could actually be in default of your student loan(s) at this point. Just because you've received notification that you're student loans will be consolidated, that doesn't mean that is has actually happened yet. Until you receive verification from the student loan consolidation lenders, you are still required to make all payments on your student loans. If you are unsure, don't assume anything. Since the student loan consolidation service will most likely be paying off your debts directly, you may not be aware if it's actually happened yet. If in doubt, contact your student loan representatives for confirmation. Until then, keep making those payments. When in doubt, always make your scheduled payment. You can always be reimbursed if you end up making a double payment by accident. ^ Back to top Out of Debt, But Not Out of MindHow should I handle my student loan consolidation debts? When you first get that notification that you've been granted a student loan consolidation, it may feel as if a weight has been lifted from your shoulders. All of that paperwork and monthly payment guesswork has been taken off of your plate. Now you can focus on making one reasonable payment with a fixed interest rate. You spent all of that time collecting student loan consolidation information and now you feel as if you've done the right thing. A nice feeling, indeed. Once that initial euphoria wears off, you realize that even though the loan is a little more palatable, the responsibility is still yours to pay it off. Don't panic. The first thing you should do is create a budget outlining all of your expenses, including your loan payment. Now isn't the time to celebrate your recent graduation with a brand new sports car. The best thing you can do for yourself is to be frugal. But being frugal doesn't mean to starve. It means eliminating the non-necessities. Eat home more often. Rent a movie instead of going to the theater. Stop buying expensive cups of coffee every morning. Okay, the coffee elimination might be a little extreme, but you get the picture. Just take it easy for a while, and spend wisely. If you consolidate your student loans, watch your spending for a while and stick to a rough monthly budget, you're well on your way to a better financial future. ^ Back to top Consolidation Is Not For All Student LoansCan I consolidate all of my student loans? Okay, so you've got all of your loans in a pile and you're ready to submit them all for student loan consolidation. Before you do that, take a closer look at each individual loan. Some federal loans (Federal Perkins Loans, for example) are best left to stand on their own. The government will pay all interest on Perkins loans while you are in school, but if you have chosen to consolidate student loans, you will not be able to receive this benefit. When consolidating federal student loans, simply contact the original lender. Do you have private loans left to consolidate? If so, you'll need to complete a credit check first. If you have poor credit, or haven't established a credit history yet, you might have to get a credit worthy co-signer to qualify for student loan consolidation. There's a lot to think about before choosing student loan consolidation and it's worth asking a lot of questions while seeking advice from trusted, impartial sources. Just remember, once you've consolidated your loans, there's no turning back. At that point, your monthly payments and interest rates are locked in. Being locked in isn't a bad thing, but be sure to research all available options and fully understand the terms of your consolidation before signing the papers. You don't want to be locked in to a loan that doesn't make sense for you financially. ^ Back to top
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