When you leave college with a bundle of student loans, you ask yourself, “How do I consolidate my student loans?” This is a question many people have about their loans from college.
Determine Eligibility
The first thing to do in the process of answering the question, How do I consolidate my student loans? is to determine if you qualify for loan consolidation.
You may qualify if you are finished with school or are enrolled half time or less. If you are still enrolled in school, you are not eligible for consolidation
If you are in the grace period for loan repayment – the time after you leave school but before loan payments begin – then you may also qualify for consolidation.
If you are already in the repayment period for your loans, then you must be current on all your loans, or you are not able to qualify for any consolidation program.
Determine Loan Type
There are two types of loans: Federal and Private. Federal student loans are provided by or guaranteed by the Federal government, while private loans were given by a private institution or semi-private institution like CitiBank or Sallie Mae.
Federal Loans have a variety of names and acronyms, but they’re all considered Federal. These include the common Stafford Loan, PLUS, SLS, Perkins and Direct Loans, among others.
Private Loans will not have acronyms, and will generate statements from the private lending institutions.
You’ll need to know which type you have because the type determines if you can consolidate and how.
Federal Student Loans
The question of how do I consolidate my student loans is easily answered for the Federal loans.
Do not try to consolidate private and federal loans together. For Federal loans, the fastest and easiest way to consolidate is by visiting the website http://www.loanconsolidation.ed.gov and beginning their paperwork process.
You can complete the entire process online, even using an electronic signature, for quick processing and answers on your consolidation. Interest rates on consolidation loans are capped at 8.25 percent.
Private Loans
With private loans, you are on your own to find an institution to consolidate them.
There are some advantages to consolidating private student loans, but if you have only or mostly private loans, the question you should ask may not be “How do I consolidate my student loans,” it may be “Should I consolidate my loans?”
Look carefully at loan terms and interest rates before you consolidate so that you can make that determination.
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