How to Consolidate My Student Loans

Many students graduate with more than one loan to pay off making a consolidated student loan necessary.  Consolidating student loans is not right for everyone, but if the conditions are right, you can save money on interest rates and can improve your credit rating as well.


Before consolidating your loans, you will need to take a good look at your current loans and their interest rates. 

First, check to see whether you have private loans, Federal or state loans – such as Federal Stafford, PLUS, or Perkins loans -- or a combination of both.  If you have both private and Federal loans, you may not be able to consolidate all your loans since the terms for Federal loans and private loans often vary significantly excluding the possibility of consolidation.  However, if all of your loans are Federal loans or all private loans, you may be able to consolidate them all into one payment.

Add up the payments and figure out how much you would be paying in interest altogether.  Also, investigate each loans payment terms and when they are due.  You will need these figures to determine which consolidation loan rate is best for you.


Most lenders will let you inquire about interest rates and calculate the total amount of interest for each loan.  You can contrast that information against your current rate of interest.  Your student loan lender may offer you benefits, such as discounts for consistently paying your payments on-time.  You can also check whether other lenders to see if they offer similar benefits.  Choose the lender which will give you the best savings overall.  For example, if your current lender does not provide you with a significant savings due to reduced interest rates, you’re better off looking elsewhere.


Once you have chosen your lender, complete the loan application carefully.  Be sure you have filled out the application as accurately as you can.  If you should have any questions, ask the lender to explain rather than leaving anything blank.  Equally important is providing your lender with everything they request.


Once you’ve completed the paperwork, you will begin the waiting game.  Your lender will process the application, you can expect some lag time.  If your loan is approved, your lender will pay off your old loans and send you a new payment coupon.  You will then make your payments to your new lender.  Be sure you make payments on time, as you would with any other lender.  It is important to realize that in most cases, consolidating your student loans leads to a longer payment periods.  However, the monthly payment amounts are usually  lower each month, providing you with a monthly savings.

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