Student loan consolidation can provide financial relief to graduates who have multiple college loans. Graduates can consolidate federal and private education loans to lower interest rates and monthly payment amounts.
Most people use student loan consolidation to eliminate multiple payments. This can be particularly helpful for medical and law school graduates who often have six or more loans. Upon graduation, students must allocate funds to cover each installment, as well as keep track of multiple payment dates. When postgraduates submit late payments, they are subject to late fees and risk damaging their credit rating.
There are several factors to consider when consolidating college tuition loans. It’s a good idea to do your research or work with a financial advisor to weigh the pros and cons of consolidating college loans. The Internet can be a good source for understanding the intricacies of loan consolidation, as well as for finding and comparing lenders.
Students with subsidized and unsubsidized loans will have different needs than graduates with one type of financing. Although subsidized and unsubsidized loans can be consolidated, lenders must consolidate the two using two separate loans to track payment transactions. However, borrowers will have a monthly payment and lenders will contribute appropriate amounts to each account.
Graduates must meet loan criteria to consolidate federal student loans. Eligibility criteria involves having an adequate FICO score; pay three installments of the loan in full; be current on all loan payments; and wait six months from graduation before applying for a consolidation loan.
Sallie Mae-funded graduates must apply for consolidation loans through a conventional lender. Currently, Sallie Mae no longer participates in the federal loan consolidation program due to legislative cutbacks made by Congress.
Students with Sallie Mae education loans can get advice from a repayment specialist to find out what refinancing options are available. Details of the student loan repayment schedule are provided at SallieMae.com.
When borrowers consolidate education loans, they must apply for a new loan to pay off outstanding student loans. Almost all private and federal loans can be consolidated, including: Perkins, Stafford, Direct, Guaranteed, and Health Professionals.
The US government offers a sponsored student loan consolidation program for graduates who obtained financing through Direct Loans. This program is a good option for students with bad credit because applicants are not required to undergo credit checks. Program details are provided at LoanConsolidation.ed.gov.
Last but not least, postgraduates should investigate loan consolidation alternatives such as forbearance programs, tuition deferment, and student loan forgiveness. Debt forgiveness programs are available to graduates who have degrees and are employed in public service fields such as education, medicine, and law. Loan consolidation alternatives are featured on CollegeScholarship.org.