Federal Student Loan Consolidation FAQs

Student loan consolidation FAQs will help to explain the options available to students who have taken out more than one federal student loan throughout the course of their academic years. Paying for higher education in America is overwhelming–both public and private universities and colleges have extravagant tuition rates, not to mention room and board and the cost of books. In order to finance these important years, most students look to federal student loans for the best deals. Often, many different types of loans are granted. So, how can you consolidate them? First, educate yourself on the types of loans available (for up-to-date information on the exact amounts offered for each loan in a given year, check the FAFSA [Free Application for Federal Student Aid] website), and then you can gauge federal student loan consolidation benefits from there.

How Does a Consolidated Loan Work?

A consolidated loan forms a new repayment plan, which allows students to form one mass payment for all the federal loans taken out rather than paying out each one individually. Federal student loan consolidation does not require credit checks but does require an application process. It is a fixed-rate refinancing program that combines all the preexisting loans to make the repayment process more manageable.

Why Consolidate Loans?

Loans can be consolidated to create only one payment per month and to decrease monthly payments. Over the long run, payments may end up costing more than the separate payments would combined, but on average, consolidated monthly payments are lower. To determine the change in interest rates and whether consolidation would be beneficial, you can input your information in the calculator available on the respective websites.

What Loans Can Be Consolidated?

Federal and private loans cannot usually be consolidated together. Federal loans should be consolidated together, and private loans can also be consolidated together. All types of federal loans can be consolidated together. This includes Stafford Loans and Federal Direct Stafford Loans, both subsidized and unsubsidized; Parent PLUS loans; and Perkins loans.

How Do You Apply for Loan Consolidation?

First, one must read the literature on loan consolidations and then fill out the application online. In addition to filling out the application, you must have up-to-date financial information to ascertain financial stability for the loan. Required financial information includes billing statements, interest statements, current loan information and financial aid information from the school.

How Do You Know if The Loan Application Was Accepted?

After you submit the application with all of the required documents, it will take some time for the application to be processed. If the application is accepted, you, the borrower, will be contacted by the Direct Loan Servicing Center with a welcome letter and further information on your new consolidated loan.

How Long Does a Loan Application Normally Take?

After the application is submitted, the approval process normally takes two to three months. Repayments to standing loans must be made while you are waiting to hear back about the application.

Can I Add a New Loan?

Consolidated loans can be re-consolidated only with the addition of a new federal loan.

What Do I Do if My Loan Consolidation Application Is Not Accepted?

If your loan consolidation application is not accepted, you can consider a personal line of credit from a private group.

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