#1Will I have to pay fees to get a consolidation loan and how long will it take?
The consolidation loan process generally takes from 30-90 days. Continue to make your regular loan payments until you receive notification that your consolidation loan has been processed. Processing fees are not charged and prepayment penalties are not assessed if you repay the consolidation loan early.#2Where can I find information about all of my loans?
Contact the National Student Loan Data System (NSLDS), which is a central database that contains loan data from schools, lenders or loan servicers, guaranty agencies, and the federal Direct Loan program.#3When is the best time to consolidate my loans?
You can consolidate loans that are:- In the grace period (for most loans, generally 6 months after you leave school)
- Already in repayment
- Currently in deferment
#4Should I get a consolidation loan through my lender or through the federal Direct Consolidation Loan program?
The differences between the two loan consolidation programs include:- Loans that you can consolidate, including types and numbers of loans and minimum balances
- Repayment incentives and other services
- Repayment plans offered
#5What will my interest rate be?
The interest rate that you receive depends on a number of factors including number and type of loans, interest rates on each loan, timing, and who processes your consolidation loan. The Direct Consolidation Loans website has a loan consolidation calculator that can help you estimate your monthly consolidation loan payments. You should also obtain estimates from different lenders before you make a final decision.#6Is a consolidation loan going to cost me more?
It may. You need to weigh the convenience of having a single monthly payment or a lower monthly payment against the cost of extending your loan repayment period and consequently paying more interest over time.#7Can I lose loan benefits if I consolidate?
Yes. Because a consolidation loan "pays off" all of the loans you include, any deferment, forbearance, or cancellation benefits specific to a loan are lost. If you have a Perkins Loan, which has a low interest rate and deferment and cancellation benefits, you may want to consider excluding it from consolidation.Before you apply for a consolidation loan, research all of your options. Analyze information from different sources and make a wise choice. The decision you make can impact your financial future.
Sources:
About the Author:
Judi Sandall is a graduate of the State University of New York, with a BA in English Literature. She is a technical writer and editor who worked in student financial aid for over 20 years.
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