Online student loan consolidation may help you reduce the amount of debt you must pay back. Read this to find out how to save money on your payments each month.
When it comes to online student loan consolidation there are several different routes to take. Before starting the student loan consolidation process, it is important to understand the implications to better grasp how much money can be saved by consolidating all the loans into one payment. Due to ecomonic restraints, many organizations, such as Sallie Mae, are no longer offering the option to consolidate student loans, because it has lost its profitability.However, there is still a consolidation program available through the U.S. Department of Education.
Loans that Can Be Consolidated
The following federal loans can be consolidated: Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Any private loans you have must be consolidated through a private lender. These loans must be in either grace or repayment status to be consolidated. They cannot be in default and the student cannot be in school. Married students must consolidate their loans individually. If you consolidate the loans into one payment, you can reconsolidate this loan only one time, but you must have a new loan to add to it that was not originally included in the consolidation.
The Typical Terms
When looking for an online student loan consolidation, expect the interest rate to top out at 8.25%. The interest rate amounts are rounded to the nearest eighth of a percent when the loans are consolidated. When there are loans with mixed interest rates, an average of the rates on all of the loans being consolidated is taken, and then rounded up to the nearest eighth of a percent. This ensures that the rate paid on the consolidation will always be somewhere in between the highest interest rate and the lowest interest rate of all the loans consolidated into one payment.
There are a few different repayment plans available, but the standard is 10 years. Depending on the situation though, the loan repayment term may be extended by two to 20 years. These repayment plans are available to ensure that payments can be made regardless of economic situation to keep them flexible and out of default.
How to Get it Done
Gather all student loan documents to determine the loans you need to consolidate. Shop around with a few different lenders to determine the best one for you. Fill out the appropriate paperwork and start making your payments.
How Much Money Will it Save You?
The amount of money you save will depend on the amount of all the loans and what the new interest rate is compared to all the old ones. Your lender will be able to show you more exact figures on how much money you will save.
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