10 Amazing Tips For Student Loans Consolidation

Introduction

Students or parents who find it hard to keep up with the payments on education loans they may be servicing, have the option of consolidating their debts into one loan which will be a lot easier and transparent to manage. Consolidation loans are available for most federal loans and some private loans. However, private education loans should not be consolidated with federal student loans, due to the differing interest rates charged on the two loans. Here are some of the benefits you can expect to accrue through student loans consolidation and how you should go about it.

Step 1

There are no fees charged on federal student loans consolidation. While some federal loans, such as PLUS and Stafford loans, may charge some fees, those fees are always deducted from the disbursement check. Other than that, there are no advance fees. If you find anyone charging an upfront fee, chances are they could be scamming you.

Step 2

Both parents and students are allowed to apply for student loans consolidation. Students can only consolidate their student loans during the grace period or after it has entered repayment. Student loans that are in default but have satisfactory repayment arrangements can also be consolidated. Students are no longer allowed to consolidate their debt while still in school. However, parents can consolidate PLUS loans any time the want to.

Step 3

Parents and students are allowed to consolidate their debt with any lender, even if their student debt is held by one lender. This allows them to shop around for the best rate from student loans consolidation lenders. Most lenders will require a certain minimum balance in consolidate your loans.

Step 4

Since the rate interest rate on private loans is often pegged on the credit score of the applicant, you may be able to get a better rate through student loans consolidation if your credit score has improved since you first obtained the loan. In order to come up with a rate of interest for a consolidation loan, lenders will first compute the weighted average of the student loan interests being combined (rounded to the nearest 1/8) and capped at 8.25 percent. The interest you pay over the time of the loan will be the same, which makes it easier to payoff.

Tip 5

Borrowers can consolidate any type of federal education loan. However, there are a few restrictions on student loans consolidation. Borrowers are allowed to consolidate a consolidation loan only once. In order to reconsolidate a student loan, you will be required to add on loans that were not previously consolidated. You can also combine two consolidation loans together. It is important to note that when you reconsolidate a loan, it does not automatically lock in the original interest rate you paid on the consolidated loan. A reconsolidated loan is treated as a new loan, which will take into consideration a new weighted average on the loan interests.

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