Low Interest Student Loan Consolidation: How to Get It

Low interest student loan consolidation is a good idea for most borrowers. Low interest student consolidation loans often mean lower payments for the borrower. Many times, the lower payments can allow former students some breathing room in their budgets. The question borrowers face is how to get these loans. The lowest interest rates for consolidation loans are found with the federal loan program. This should be your first choice. However, if you cannot qualify for a federal loan, you can also apply with a private lender.

Federal Student Consolidation Loans

These loans have the unusual combination of low interest rates and easy qualification standards. For example, you do not need to be employed to consolidate your loans. These loans are not approved on an evaluation of your income. These loans also do not require collateral. The government backs the loans. You will also not need a cosigner. However, if you default, the government will pay the lender and then pursue you for the repayment of the loan.

Federal Student Loan Eligibility

There are two things that will make you ineligible for this type of loan. First, if you are in default on your current loans, you cannot qualify. However, you may be able to take some corrective actions and qualify at a later date. The second thing that can make you ineligible is your status as a student. For any loan you are attempting to consolidate, your student status must be half-time or less. If you are classified as a full-time student, you will not qualify.

Private Loans Consolidation

Private student consolidation loans often do not have rates as low as those for the federally backed loans. Yet borrowers can still have some of the same benefits with these private loans as those who are in the federal program. The qualification process is more involved because the borrower will be required to qualify based on her credit standing. There are also income requirements. Sometimes, young borrowers do not have the credit history and the rating to qualify. In these instances, a cosigner may be required. Some lenders may charge additional fees, which may include application and origination fees. Therefore, it is important to ask questions. Make sure that you know when the repayment period begins. Ask if there are any prepayment penalties if you pay the loan off early.

Preparation

The best way to get a low interest consolidation loan is to manage your existing student loans adeptly. Therefore, you may need to take some steps to be prepared to take advantage of the loan consolidation option. Remember, you will not qualify for a federally backed loan if your loans are in default. So, if you are struggling to pay your student loans, contact your lender. You may qualify for forbearance or a deferment or for a repayment alternative you can afford. Watch your expenses and manage your finances wisely. Be careful about your credit card usage. If you have a credit card, make sure you are getting the best rate. If you manage your finances well, that will yield rewards in the kinds of options you may be able to pursue later on.


Need a Student Loan? Click here!