Student Loan Consolidation:
Is It Right for You?
- If you are married and your spouse also has outstanding
student loans, you can jointly consolidate the loans
with anagreement to repay regardless of total loan indebtedness
or any future change in marital status.
- Student loans in default may be consolidated if
satisfactory payment arrangements have been made with
the loan lender or guarantor. Generally you will need
to be in repyament and have made three consecutive and
voluntary full on-time payments.
- If you are near the end of loan repayment, consider
deferment or forbearance if in financial need. Although
consolidation lowers monthly payments, it also means
more interest will be accrued over the life of the loan
and significanlty increase the loans total cost. To
best reap the benefits of consolidation, try to make
the same monthly payment and pay the loan ahead of time.
- For help locating information on your loans, the
Department of Education's National
Student Loan Data System keeps an an online record
of all your federal education loans and grants. It provides
loan descriptions, date of loan origination, and loan
amounts, as well as any outstanding balances. You will
need your U.S.
Department of Education PIN to access the site.
(If you do not have a PIN and need to apply, your pin
will usually be mailed to you within ten business days
- To lower total interest rates and cost of your loan,
you may not want to consolidate all of your student
loans (for example, you may choose to include only unsubsidized
loans or exclude a high interest loan with a low balance.)
Check with your lender which options would be best for
- A few more reasons to consider consolidation: Interest
rates are expected to rise an additional 1.5% to 2.0%
on July 1, 2006. Lawmakers are proposing to change the
student consolidation loan program from a fixed interest
rate to a variable interest rate, and may also include
a 1% loan origination fee (currently there is no origination
fee for consolidation.)
Need additional information? EdFund
has a publication that discusses the advantages
and disadvantages to loan consolidation, and provides
tips on saving money along with worksheets.