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Student Loan Consolidation

One of the primary benefits of student loan consolidation is reduced monthly payments. Loan consolidation can be a smart choice for graduates with multiple loans, but careful consideration should be given. In some cases, interest can be higher than what students are paying on federal loans.

Another perk of student loan consolidation is borrowers only have one payment. This is particularly helpful for medical and law students who have several student loans. It can be difficult to manage four or more loan payments each month. Not only must graduates budget finances to accommodate different loan payments, they must also keep track of payment dates. Missing student loan payments can result in late fees and reflect poorly on credit reports

It is a smart idea to consult with a financial planner or conduct online research to learn about the pros and cons of college loan consolidation. Multiple resources are available via the Internet which can help borrowers find the best consolidation loan and rate of interest.

One source for education loan consolidation information is This government sponsored program allows post graduates to apply for loan consolidation without the need for a credit check, making it a good choice for students with low to poor credit scores.

Applying for Direct Loan consolidation is a 7-step process which can be completed in the privacy of your home. The first step involves filling out the online student loan consolidation loan application. Next, all included loans are verified. These can include defaulted loans held by the Department of Education, SallieMae student loans, or education loans funded through private lenders. Student loan verification is required to determine if it is eligible for refinance consolidation and to determine the outstanding balance owed.

Borrowers who have defaulted on college loans or those who elect to use the Income Contingent Repayment Plan must submit an ICR consent form which is sent to the Internal Revenue Service. ICR is a student loan repayment plan that offers fluctuating payments based on annual income, family size and loan amount. Therefore, reported IRS income must match or the loan consolidation process could be delayed or denied.

Once student loan consolidation forms have been approved and loan balances verified, Direct Loan submits payment to the lender. Once payment is received and processed, borrowers must setup their personal student loan account. Loan payments generally commence within 60 days; giving students a temporary financial reprieve.

In addition to researching student loan consolidation programs, graduates might consider alternatives such as tuition deferment, forbearance programs, and student loan forgiveness. While the Obama administration intends to establish college education debt forgiveness programs for individuals employed in public service sectors, borrowers will have to contribute payments for up to 25 years before student loans are forgiven. One source for learning more about student loan forgiveness due to economic hardship is

We invite you to learn more about student loan consolidation in our educational loan programs article library. Here you will find information and resources which can help you make the best decision based on personal financial circumstances.

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Published on April 26, 2010 at 03:51 AM

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