When students take out private student loans for the first time, they usually have little to no credit history built up. This means, their interest rates probably weren’t ideal, or they applied with a cosigner. If you’re one of these borrowers with high interest rates, refinancing (consolidating) your student loans could save you money, especially if your credit has improved over time!

Refinancing student loans can be great for borrowers with high interest rates, or even who need to lower their monthly payments. To get started, here’s what you need to do:

Step 1: Do Some Research

There are a few different banks and lenders that are available to consolidate student loans. Compare your student loan refinancing options to see the different benefits and find which loan is right for you.

Step 2: Calculate your Potential Savings

The consolidation payment calculator at StudentLoanConsolidator.com can provide a good estimate of the amount you can save on your monthly payments by refinancing your student loans. Keep in mind that any calculator you use is an estime and to find out your actual interest rate and monthly payment, you’ll need to start the application process.
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1. Easier Repayment

If you have loans from many different lenders, staying on top of your payments can be tough. Consolidation can help to streamline the repayment process, so you only need to send one check, to one lender (two if you have both federal and private loans).

2. Better Discounts

Many lenders offer student loan discounts for a variety of situations. Discounts can include interest rate reductions for setting up automatic payments, or even for being a current customer of that bank. If your loan does not have any incentives like this, then consolidation may save you some money.
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In a recent State of the Union Address, President Obama mentioned a Special Direct Consolidation Loan available to some borrowers with federal loans. This loan is not your typical Direct Consolidation Loan, and is only available for a brief period this year. This is a great opportunity for borrowers with the old, FFEL loans, as it will make managing repayment a much simpler task. Let’s take a look at how this loan works.

Background

First, let’s understand a little bit about historical student loans. Before Direct Loans came into play, the Federal Family Education Loan (FFEL) Program included four types of loans: Stafford, Unsubsidized Stafford, PLUS, and Consolidation. These loans, while still federally guaranteed loans, were made by private lenders and serviced privately. Now under the Direct Loan Program, federal loans are funded directly through the government (though there are four companies who service the loan on behalf of the Dept. of Education).
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For students about to graduate, you may want to check out the article New Grads, Start Thinking About Consolidation. This will give you helpful tips on why consolidation can be a good option.

Conversely, the article What NOT to do when Consolidating your Student Loans tells you just that. It provides useful information on the types of situations where consolidation might not be the best option.

While consolidation for federal loans is usually a good idea, it may not be so black and white with private loans. In the current economy, private lenders have been reluctant to grant consolidation loans. Should I Consolidate my Private Student Loans can help students to decide how and where to go to consolidate their private loans.

Still have questions about consolidation? This post may be able to help. From Our Forums: Consolidation Question Quartet! answers a few common questions about consolidating federal loans. Maybe it’ll answer yours. If not, you can always check out the Financial Aid Forum’s consolidation help section.

Hopefully these articles will proves useful in the upcoming months. Remember, if you need more information regarding loan consolidation, visit StudentLoanConsolidator.com.

A lot of students and their families are hesitant, for a variety of reasons, about taking out a private student loan. While federal aid and scholarships/grants are always the best options, it is often necessary to use a private loan to cover the remainder of the cost of attendance. Here are some facts to help ease your concerns about private loans:

1. You CAN get a private loan with bad credit. You just need to find a parent or trusted family member to cosign the loan for you. A good cosigner is anyone who regularly pays his or her bills on time and is not trapped under a mountain of debt. Plus, a good cosigner can help you get a better interest rate, which can save you money.
2. You CAN afford a private loan, if you plan accordingly. Among the best ways to plan ahead is to only take out what you need. If you take out more than one loan, you may also choose to consolidate in order to receive a lower monthly payment and better interest rate.
3. You CAN find a trusted lender. Yes, there are plenty of shady lenders out there who are only out to scam you. Always be sure to do some research before providing personal information to a lender. One great area to start is with our Private Student Loan comparison tool, which features only trusted, legitimate private loan lenders.

It seems like a cosmic joke for many post-grads – you pay all this money for a college degree, you graduate, and now you can’t find a job.  Worse, you’re expected to start paying off those student loans.

One way to make life a little easier is to defer your student loans. Deferment essentially suspends student loan repayment based on certain situations, unemployment being one of them. You are allowed to defer your loans up to three years.

One of the drawbacks of deferment is that the interest rate remains variable and could adjust frequently by the time you are able to start making payments. However, if you consolidate your federal student loans prior to applying for deferment, you can lock in the interest rate and lower your eventual monthly payment.

Click here to consolidate your student loans.

Click here to download the deferment forms.

Looking to consolidate federal and private student loans? While you can’t consolidate them together – and you wouldn’t want to anyway, you can take the consolidation of both types of loans to your advantage.

You can consolidate your federal student loans any time after you graduate or drop below halftime enrollment.  Always consolidate federal loans first. Consolidating your loans will improve your credit rating, and when you go to consolidate your private loans, which are credit-based, you will have a better score and most likely get a lower interest rate.

For more information on loan consolidation (federal and private), visit www.StudentLoanConsolidator.com.

Based on a great question from our Financial Aid Forum, I’d like to take a second today to talk about multiple loan consolidations.

Our reader asks:

I have new federal loans and old federal loans. I consolidated my old federal loans to a private company (great lakes) several years ago. Can I consolidate my new federal loans and my old loans that I consolidated once may years ago into one loan now? If so how do I do this and what would the rates be like currently for this type of consolidation. My new federal loans were disrupted after 2006 and my old loans which I consolidated in 2002 are at a rate of 3.25%. (more…)

Seems strange, doesn’t it? You wouldn’t think that taking out a new consolidation loan could actually benefit your credit score and history, but you would be surprised of the positive impact it has on your record.

Let’s think about the process abstractly for a moment. Say you have six federal loans, and three private student loans accruing interest on your credit history. This means that you have nine open loans under your social security number, not including any revolving lines of credit (credit cards, store cards) you may have, among other potential things. The object of the game is to have as few items on your credit record as possible, while keeping them all up-to-date on payments and establishing solid account history with them. (more…)

So you’re getting ready to consolidate and are wondering what your interest rate will be. That’s certainly a fair question. I mean, when you go out to dinner you don’t pay for your meal before you eat it. You make sure you get what you ordered, that is tastes good, and that the temperature is to your liking. Then, at the end of the meal, you take out your credit card and sign on the dotted line. Why should things be any different in the consolidation world? Don’t sign and then ask questions later. Get the answers you need up front.

Here is an interesting federal consolidation fact. Ten students who graduate from the same university this May could very well have ten different interest rates. But how can this happen?

Unlike in other financial circles federal consolidation interest rates are not tied to one thing in particular, like the Fed Funds Rate. To arrive at your fixed interest rate the consolidation company simply takes the weighted average of all your loans. They look at the interest rate and the amount of each loan, then round up to the nearest eighth percent.

Nowadays undergraduate students are coming out with rates ranging from 3.61% to 6.8%, and end up consolidating for about 5-6%. A lot of grad students carry grad plus loans at 8.5%, which elevates their fixed amount.