College education can open doors, but not without a price. Often, people accumulate hefty education loan bills that must be paid--eventually. With more than one student loan, keeping up with loan payments, as well as other everyday expenses, can be difficult. Some people turn to student loan consolidation to relieve the pressure.
Identification
Student loan consolidation involves combining multiple student loans into just one debt. This process refinances a person's student loan debt and can lead to a fixed interest rate rather than multiple loans with different interest rates. Consolidating student loans may save a person money over time and make paying for education easier.
Benefits
There are different types of student loan consolidation. Some consolidation programs allow people to cut their monthly student loan payments in half. Also, consolidation makes repaying debt simple, as a person may only have one debt to pay each month instead of several to remember. In some cases, consolidation may even help to improve a person's credit rating, as he will have just one debt outstanding rather than several.
Types
Federal consolidation is one type of student loan consolidation. This type allows a person to combine all of his federal student loans into just one debt. With consolidation of federal student loans, there are no credit checks, and the borrower will not have to face charges for filing an application. There are no employment, collateral, or cosigner requirements for obtaining a federal student loan consolidation. There are also private loan consolidation programs for those with non-federal loans. These programs reduce the number of private loan payments a person makes per month and may also save her money. However, a person may have to submit to a credit check and secure a cosigner to consolidate private loans.
Considerations
A person must meet certain eligibility requirements to be considered for a federal student loan consolidation. First, he cannot be in default on any of his federal students loans. However, making satisfactory payment arrangements and keeping up with payments can restore eligibility. A full-time student is not eligible for federal student loan consolidation, but someone attending half time or less may be eligible.The requirements differ with private student loan consolidation. Monthly income, collateral and the availability of qualified cosigners all come into play with this type of consolidation.
Time Frame
Student loan consolidation can occur fairly quickly. According to Student Loan Consolidator, private student loan consolidation can occur in 45 days or less. However, time frames vary, depending upon how quickly documentation is provided and how fast other lender requirements are met. Federal student loan consolidation can take from 1 to 3 months to complete.
Misconceptions
It is a misconception that applying for student loan consolidation is difficult or requires a trip to a financial aid office. You can apply for student loan consolidation by phone, through the mail, or even online. The Federal Student Aid website provides application information, resources and links. You may also apply at Student Loan Consolidator.
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