Considering Consolidating Student Loans

For borrowers who are considering consolidating their student loans, many questions can arise. Here are a few quick tips and answers to some common student loan consolidation questions, for borrowers considering consolidating their student loans:

How does a student loan consolidation work?
A consolidation loan lets you combine all your student loans into one new student loan, allowing for a single monthly payment, at a possible reduced cost. Though student loan consolidation can provide you with a more affordable monthly payment, it oftentimes extends the repayment term of the loan, which could cause you to pay more over the lifetime of the loan.

Can I defer a consolidation loan?
One way a consolidation loan can be helpful is to renew student loan deferment rights, if you have already exhausted the deferment period on your current student loan. However, this may not be the case for all consolidation loans, so be certain to check the terms attached to the consolidation loan with your lender. In addition, borrowers should be aware that student loan interest for most student loans capitalizes during deferment or forbearance periods, so only use these options if you absolutely need them.

Where can I consolidate my student loans and how mush will is cost?
If you have federal student loans, the majority of those loans can be consolidated under the Federal Direct Loan Consolidation program. If you have private student loans, consolidation might not be an option, as many student loan lenders are no longer consolidating student loans. If you do have private student loans and are wishing to consolidate, start by checking with your lender. There are typically no fees or costs to consolidate your student loans, however you will likely want to verify this with your lender (Stafford and PLUS student loans can charge a fee that is deducted from the disbursement check).