- You can combine multiple student loans into one with loan consolidation.
- You will apply for a consolidation loan through the federal government online or by mail.
- When you consolidate, you will receive a fixed interest rate, which is the average rate on your old loans.
- Learn more about Insider student loan coverage here.…
Keeping track of multiple monthly federal student loan payments can be a headache. Student loan consolidation can help streamline the process and make it easier for you to manage your financial obligations.
What is Loan Consolidation?
Loan consolidation means you are consolidating multiple federal student loans into one. You will receive a fixed interest rate, which is the weighted average of the rates on your old loans, rounded to the nearest eight percent.
Loan consolidation can make it easier to manage your financial obligations as you will be making one monthly payment instead of several. You can also get a lower monthly payment by extending the loan term, although you will pay more in general interest.
However, when you combine your loans, any interest outstanding becomes part of the main balance sheet for your new loan. This means that interest may accrue on a larger base balance than if you had not consolidated. You will not get a lower rate by pooling your student loans.
The application for a Direct Consolidation Loan is free of charge. Private companies may offer assistance in completing the application for a fee, but they are not affiliated with the Ministry of Education in any way.
Can only be consolidated federal loans – private loans have the right to refinancing (sometimes mistakenly referred to as private consolidation). In addition, you can only consolidate the loan being repaid or grace period, so you cannot do this while you are still in school.
What do I need to consolidate student loans?
You will need to complete a government consolidated direct loan application in order to consolidate your student loans. you also can apply online or by mail print application… You need to provide the following:
- Verified Federal Student Benefit Ticket
- Contact information including address, email, and telephone number.
- What loans do you want to consolidate
- Social Security number
- Employer’s name and address (or an indication that you are not employed)
- Condition and driver’s license number
- reference Information
- Information about your income (if you want to consolidate under Income-oriented repayment plan)
Five Steps to Loan Consolidation
- Review the current loan conditions. Log into the portals of your service centers and view the interest rate that you pay on your loans and the duration of their repayment. Download all relevant files and keep them in your records in case of merge errors.
- Apply for Direct Consolidation Loan with the federal government… You must complete the application in one sitting and it will take approximately 30 minutes or less. When you apply, you will see the new loan conditions.
- Choose a repayment plan. You can choose a standard repayment plan, the default option that sets a fixed monthly payment over a ten-year period. Staged repayment plans are also an option in which your payments will start low and increase every two years over a ten-year repayment period. You can also choose an income based repayment plan that takes your specific income and family size into account when calculating your monthly payments.
- Sign up Main bill… You will need to sign the master bill if you decide to take out a new loan. An MPN is a legal document that you sign to promise to repay a loan along with interest and fees. You will confirm the loans you want to consolidate when you sign this document.
- Continue making payments… Continue repaying current loans until your consolidation specialist tells you that they have been repaid by your new direct consolidation loan. Once the consolidation process is complete, you will start making one monthly payment instead of the several you have made before. Your loan officer will tell you when the first payment is due, that is, within 60 days after the loan is paid off.
Student loan consolidation is a relatively painless process that can help you organize your student loan payments – all you have to do is fill out a federal application and enter your personal and financial information.