Are you thinking about consolidating your student loans? If so, then there are a few things that you need to know before making any final decisions. First of all, it is important to understand that not all student loans can be consolidated. Many federal and private educational loans cannot be consolidated, and this is something that you should make sure of before consolidating any such loans. The good news is that with a good education, almost any student loan can be consolidated, including loans from the government.
It is important to understand how the student loan consolidation works before you proceed. Basically, when you consolidate a federal student loan, you will be making one payment for the amount of money that you owe, instead of paying off several different student loans. In addition, in most cases you will save money by consolidating. This is because in most cases the interest rate on a student loan is lower than what you are currently paying. In fact, in some cases it may actually be better to pay off the student loan with a lower interest rate than to refinance when the interest rate drops.
There are a few disadvantages to consolidating your student loan. While you will typically be able to qualify for a better interest rate when you consolidate, this can also mean that you will end up paying more money overall because you will have to pay that interest at a higher rate. Consolidation can also affect your FICO score negatively, which is not a good thing when you are trying to get credit.
Before you start the process of consolidating your student loan, you should first speak with your loan servicer. Your loan servicer is the person or business that will work directly with you to help you obtain the best rates on your loan. They will work to negotiate with your existing lender to lower the interest rate on your loan, as well as negotiating new terms for the loan itself. You will want to talk with your loan servicer and shop around for the best rates. However, there are a few things you need to keep in mind when you are looking to consolidate your student loan.
If you are going to consolidate federal student loans, then you will need to prove that you will be able to repay the new loan. You will need to submit proof of your prior employment, or a statement from your employer that will prove that you are employed. You will also need to show that you currently have student loans that are paid off. You should also contact any financial institutions that you currently use for your student loan payments, and request them to send you a letter of intent. This will be your official application for the student loan.
The next step to consolidate your student loan is to decide if you want to consolidate both federal and private loans. Many students opt to consolidate both federal and private loans. This will allow them to save money. Another advantage to consolidating both types of loans is that the interest rates are almost always better when you consolidate. Even if you currently have high interest rates, you may be able to lower them by consolidating, which will help you in the long run.
Before you go ahead and consolidate all of your student loans, it’s important that you know what you are doing. You will want to talk with your current lenders to see if they would be willing to combine your private loans into one easy payment. If they say yes, then this is good, but if they say no, then you may want to look into other options. Remember that this is probably one of the biggest decisions you’ll make in your life, so make sure that you do it right.
You want to be sure that you do not just consolidate your student loan to get the best interest rate, as this can backfire on you. Always make sure you do your research and talk to your lender before you decide to consolidate anything. Also remember that if you decide to consolidate, you are not eliminating your student loan. It will still be included in your credit report, just like all of your other loans. It’s just going to be in one lump sum instead of several payments.