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Top 10 Tips For Student Loan Consolidation

Student Loan Refinance
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Student loan consolidation is a type of refinance in which you combine multiple loans into one. Read on for the top 10 tips for student loan consolidation.

  1. Student loan consolidation involves taking a new loan: You are borrowing money from a new loan and using that money to pay back all of your existing loans. The lender who you get the consolidation loan from generally sends the entire payoff balance directly to your existing lenders, so the cash doesn't come to you.
  2. You can consolidate as few as two loans: Some may believe you need multiple loans or loans from different lenders to consolidate, but this isn't true- if you have even two loans from the same lender, you can generally consolidate to get the benefits of consolidation.
  3. You can consolidate loans taken from the same lender- Even if all your loans are from the same lender, you may still be eligible to consolidate and combine them into one loan.
  4. There may be limits on the types of loans you can consolidate- Government backed lenders and some private lenders limit you to consolidating only eligible government loans, such as Stafford loans, Perkin's Loans or Pell Grants (among others). It may be more difficult, or even impossible, to consolidate private loans.
  5. Many different lenders may offer consolidation programs: Shop around and find a lender- either public or private- who offers the best deal for you.
  6. Consolidation can take several months to accomplish- From the time you apply to the time when the checks are sent out, it may be as long as 90 days or more (The Department of Education, in fact, specifies that you can expect to wait at least three months minimum from the time you apply).
  7. Loans generally need to be in good standing to be consolidated: Lenders won't allow you to consolidate loans in default until you make all the back payments owed.
  8. Consolidation can change the repayment terms of your loan: Different lenders have different options for repayment. By consolidating, you may open up your payment options and be able to opt for a payment schedule contingent on your income, for example.
  9. Consolidation can change the terms of loan forgiveness: Some government lenders and private lenders will forgive some of your loan balance for each year you work in an eligible public service job. Find out if your lender does.
  10. You may be limited in the number of times you can consolidate student loans: Many lenders will allow you to consolidate only once.

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