Loan consolidation has become a popular choice for many student loan borrowers who are struggling to manage multiple loan payments. It isn't uncommon for graduates to end up with twelve or more individual loans to repay, creating a financial strain and a bit of confusion when it comes to managing the loans effectively. Be sure to weigh the pros and cons of consolidation before you select a student loan consolidation lender.
Instructions
1. Review all of the information relating to your student loans to determine your lenders, interest rates and the types of loans that you are repaying. Only federal loans are eligible for consolidation through federal loan consolidation programs, including Stafford loans, PLUS loans and Perkins loans.
2. Determine whether any of your lenders offer a loan consolidation program and review their services carefully. Just because you are already indebted to the lenders doesn't mean you have to select one of them to be your consolidation lender. It may be the easiest choice, but if you haven't been pleased with the level of service they have provided thus far, it may be time to move on.
3. Remember that all federal student loan consolidation programs are basically the same. The only things that set them apart are their customer service and their repayment incentives. A typical repayment incentive consists of offering borrowers an interest rate reduction after they've made their monthly payments on time for a specified length of time. Programs such as these can save borrowers money, so they should be weighed heavily when selecting a loan consolidation lender.
4. Find out as much information as you can about each lender before you make a decision. Make sure that you determine their credibility, their repayment incentives, consequences for missed payments and the process for filing for a deferment. Many borrowers also appreciate companies that offer e-services, such as 24-hour online bill pay and online applications for deferments, forbearances and graduated repayment plans.
5. Select a student loan consolidation lender only when you're satisfied that you've chosen a lender who will offer you the best service over the term of your loan. Once you file your application, you can expect the consolidation process to take a couple of months. In the meantime, continue to pay your monthly payments on each individual loan and stay in contact with your consolidation lender so that you are always up to speed on the progress of your application.
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