Student Loan Consolidation Through the Department of Education

If you are a college student or college graduate, you may have considered combining your debt through a consolidation department of education loan for your student loans. The department of education offers consolidation loans that can help you better manage your debt by consolidating the various loans you have into one loan.

Advantages of Consolidation

There are many advantages to consolidation your student loans. It is more likely that you will be able to keep track of your debt and make timely payments if one lender is handling all of the debt. As well, lenders (including the department of education) may offer incentives like lower interest rates when you consolidate.

Over time, if you continue to make on-time payments on your consolidation loan or have the payment automatically withdrawn every month, your interest rate may be reduced by a quarter point, which can add up to significant savings.

How to Apply for a Consolidation Loan with the Department of Education

Step One - Get Educated

Before you apply for a consolidation loan, you should carefully read the requirements, the term to which you will be obligated, and the agreement. This information is available online or can be requested by contacting the department of education. Before deciding to consolidate your student debt, it is worth talking to your current lenders to see what advantages, if any, they can offer you to keep your loan with them. Then, do the math and choose the option that saves you the most.

Step Two - Fill Out the Application

It is a simple process to apply online. In fact, most of your student loan information is already available to the department of education, so you will not have to spend a lot of time looking up your loan information. What you will need, however, if you want to apply online, is the secret pin number you used to apply for your financial aid using the FAFSA. If you don't know your PIN, you can simply print the application, sign it, and mail it in.

Step Three - Sign the Promissory Note

Remember, student loans are typically not forgivable in bankruptcy and continue to be persistently collected until repayment is complete, so take your loan debt seriously. When you sign your promissory note, you are agreeing to continue making payments as scheduled. Consolidating your loans does NOT prevent you from applying for a forebearance or deferrment if you return to school, are deployed with the military during time of war, or experience economic hardship. The most important thing you can do is stay in touch with your lender if you have difficulty making payments.

A Note about Debt Forgiveness

Student loan debt adds up quickly and can have a significant impact on your financial future. There are programs in place to help you ease the burden of your student loans. If you choose to work in the public sector, teach, or choose a career in a high demand field, you may be eligible for loan forgiveness. Typically, you must make payments for ten years before the loans will be forgiven, but you can save a significant amount of money with the right career moves.

Need a Student Loan? Click here!