Student Loan Consolidation

Student Loan Consolidation

Student Loan ConsolidationWhen it’s time to repay your student loans, you can simplify the process of making your monthly payments by consolidating your loans. The Federal Consolidation Loan allows you to combine your existing federal student loans into one new loan. Only loans in grace or repayment status are eligible for consolidation. If you have federal loans with multiple lenders, you can consolidate them with one lender and have the convenience of just making one payment each month. But convenience isn’t the only advantage to consolidation! Consolidating student loans can be a smart financial move, also. If you’re considering loan consolidation, watch for periods when interest rates are low so that you can consolidate your variable rate federal loans at a lower fixed interest rate for the life of your loan. The interest rate on a Federal Consolidation Loan is calculated using the weighted average interest rate of loans consolidated, rounded up to the nearest 1/8%, or 8.25%, whichever is less. Sometimes, when you consolidate your loans, the loan term may be extended which could allow for lower monthly payments and an improved cash flow.When it’s time to select a lender for your student loan consolidation, you have the freedom to choose any lender you like. It’s a good idea to look for a lender with a solid reputation and one with plenty of student loan experience. If all your existing loans are with one lender, you may want to first consider consolidating your loans with that lender. Be sure you make an informed decision before you consolidate. Once you consolidate, you forfeit any benefits you may have had with individual federal loans and you cannot take the loans out of consolidation.

Ask the lender these questions to help you decide:

When should I consolidate my federal student loans?
What are the advantages of a consolidation loan?
Are there disadvantages to loan consolidation?
Will I lose my grace period if I consolidate right after graduation?
What are my maximum repayment term and my monthly payment if I choose to consolidate?
What is the minimum loan amount I can consolidate?
What other payment options are available that may meet my need of creating a more affordable monthly payment without consolidating?
Will I lose my repayment incentives on my current loans once I consolidate?
What benefits or incentives will I receive if I choose to consolidate?
Will the loan be sold if I decide to consolidate? To whom?
Who will service the loan if I decide to consolidate?
Note: Consolidation is a process conducted between you and your lender. FIU is not involved in the process. Please direct all your questions to your lender.