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It’s not difficult to qualify for federal student loan consolidation, but you do have to meet certain criteria.
Most, but not all, federal loans are eligible for the program.
Some debt relief companies offer to consolidate your loans for a fee, but this isn’t necessary. You’ll have to submit your name, address, Social Security number, driver’s license state and number, contact information and two references who’ve known you for at least three years. This information should be on your monthly billing statement.
“Never pay a fee to consolidate your student loans,” says Kantrowitz. You don’t need to consolidate all your loans, and doing so may be a bad idea in some circumstances.
By contrast, federal loan consolidation won’t change how much interest accrues, and eligibility doesn’t depend on your creditworthiness. You can consolidate your federal student loans and refinance your private loans, or consolidate some of your federal loans and refinance others.
The servicer you choose for your consolidated loan will inform you when it pays off the existing loans, at which point you can stop making those payments and start repaying your Direct Consolidation Loan.
If you’re using the paper application, you’ll mail the application to the servicer of your choice. You could also choose the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan or Revised Pay As You Earn Repayment Plan as long as your consolidated loan doesn’t include a parent PLUS Loan.
With ICR, IBR, PAYE and REPAYE, your monthly payment will be 10 to 20 percent of your annual discretionary income, the difference between your actual income and 100 to 150 percent of the federal poverty guideline for your family size and state.
In addition to refinancing student loans and parent PLUS loans, the company offers undergraduate and graduate school loans.
It partners with Pencils of Promise, an education nonprofit, to fund the education of a child in the developing world each time it funds a new student loan in the U. Best Features: Common Bond allows qualified borrowers to release a co-signer, and children can refinance parent PLUS loans into their name.
This guide provides an in-depth explanation of the differences between federal loan consolidation and private loan refinancing, the pros and cons of each and insight into which options are best for different situations. News compared private lenders to come up with recommendations for different kinds of borrowers.