Loan Consolidation

GENERAL INFORMATION:
The consolidation of loans is to combine several student loans into one bigger loan with one payment to one lender/servicer. There are many lenders/servicers, vying for your business, so before you consolidate, it is important to look closely at what loan consolidation is, what it entails, and if it is the right thing for you.

To be eligible to consolidate you must have graduated or withdrawn from school. Students can consolidate with any lender, even if all their loans are with a single lender (including Direct loans), but some lenders may require a minimum balance before they will consolidate. Any Federal loan can be consolidated, and some private loans may also qualify. For more in-depth information on loan consolidation, please visit:

• Department of Education
• Finaid.org
• Studentaid.ed.gov

CONSOLIDATION PROS:

• Reduces monthly payments with an extended repayment period.
• Make one payment to one lender/servicer each month.
• There is no charge to consolidate.
• Lock in a low fixed interest rate.

CONSOLIDATION CONS:

• Prolongs the life of your loan.
• Forfeit original repayment incentives.
• Possible elimination of deferment options.
• Potential loss of grace period.
• Possibly pay more total interest over extended repayment period.
• Potential loss of loan forgiveness option under Stafford and Perkins.

BE INFORMED:
With so many lenders/servicers vying for your business some are more scrupulous than others, here are some things to look out for:

Some consolidation companies send very official looking correspondence that may resemble the Department of Education documents. Be sure to review solicitation carefully.

It is best to deal directly with a lender who will own and service your loan for the duration of repayment, not a marketing company or call center that will sell your loan to a third party. So be sure you know who the actual lender of the consolidation loan is.

Never pay a fee to consolidate. There is no charge to consolidate, so you should never have to pay a consolidation fee.

Additional loan consolidation information courtesy of edamerica.

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