Student Loan Consolidation Information - What You Need To Know

A consolidation loan is one that allows you to combine more than one of your student debts into a larger one with a single lending institution. The new lender uses the funds to pay off the balances of all other student loans that you have. This concept is very close to what happens in a home mortgage refinance. A student loan consolidation is available to many students with federal loan types. Some lenders also can offer you private loan consolidations.

Is There Any Cost Associated With Student Loan Consolidation?

There is no fee per say to consolidate your student loans. However, generally you will pay slightly more with your consolidated loan because of a longer repayment period. This occurs because you are paying less each month on your loan and there is a higher balance due to pooling many loans into one larger one. So this causes you to pay more towards interest over the term of the debt.

An important note to keep in mind is that you should under no circumstances pay a fee in advance to consolidate your student loans. If you are asked to pay an up front fee, it is most likely a loan scam. Do not enter into a loan with an up front fee.

Can Anyone Consolidate Their Loans?

Generally both parents and student borrowers are allowed to consolidate educational loans. However, you may not consolidate loans between different borrowers. Consolidation can only occur between the same borrower of the loans. They can however consolidate their loans separately. Another thing to keep in mind is that students that are married are no longer allowed to consolidate their student loans together. This is actually a good thing because if the couple were to get divorced then each of them would be responsible for the full amount of the debt. To avoid problems this provision was enacted to avoid this detail.

Another important detail is that students cannot consolidate their loans while still attending school. You may only consolidate your debts in the grace period or during debt repayment.

Can I Consolidate My Loans With Any Lender?

Yes. You may consolidate your debts with any lender. This is good news because it will allow you to shop around for the best interest rate on your consolidation loan. Something to keep in mind is that most lenders will only offer a consolidation loan with a minimum balance of at least $7,500.

Student Loan Deferment - Different Types of Forbearance Offered

If you are like many people, the economic crash has affected you like so many others. Just trying to pay your regular bill, much less student loans, can be extremely taxing on your income. So, if you have fallen behind on your payments, you need to get in touch with your lender immediately to discuss student loan deferment. There are several types of deferments, forbearance's or other payment relief options that may be available to you.

Contact your lender to find out if your situation qualifies for a deferment. If you are suffering a hardship like unemployment or if you have started school, you might qualify. Keep in mind that depending on the type of loans you have, you might be responsible for the interest that accrues during the deferment period. One form of deferment is for military personnel. If you are active duty or are called into active duty this deferment is available to you. Your loans may also qualify for deferment during demobilization.

Those who are members of the National Guard or other reservist programs, regardless of whether current or retired, who is called back to active duty while attending school at least part time might be eligible for a deferment for up to 13 months after their service has ended or if you return back to school. If, according to federal regulations, you are experiencing economic hardships, a deferment may be available to you for up to 3 years if the loan is a FFEL, Federal Perkins or Direct loan. Regardless, you need to contact your lender to find out if you qualify.

An allowance offered by your lender that lowers your payment amount or postpones them is known as forbearance. For some reason, if you can't get a deferment, you may be able to get forbearance. Regardless of the type of loan you have, you will be responsible for making the interest payments on your loans. You may be eligible to have the forbearance granted for a total of 3 years. Just a side note for PLUS loan borrowers. For the most part, the same requirements apply when requesting forbearance's or deferments. Since the loan is unsubsidized, interest will accrue during the forbearance or deferment period. You don't have to pay the interest during this time but it will compound if you do not.

While the lender will ask you choose a repayment plan when you first enter repayment status, you may want to change later if different plans might work better for your financial situation. The FFEL Program, you can change plans once a year. The Direct loan Program allows you to change plans at any time as long as the maximum repayment period under your new plan is longer than the time you have already been in repayment.