Education loan consolidation doesn't have to be a difficult process.
With the right information, education loan consolidation can be simple,
quick and easy. To get you started on the right track, here is the
basic information about education loan consolidation. This article will
help you understand education loan consolidation and how to go about
doing it so you can stop stressing and start enjoying being done with
What is Education Loan Consolidation?
At the most basic level, education loan consolidation is when you pay off all your student loans with one large loan. So, instead of owing payments to multiple lenders for multiple loans, you only owe one lender for one big consolidation loan.
To make education loan consolidation even clearer, here's an example. Imagine that you owe four banks each $1,000. Therefore, you are in debt a total of $4,000. Having four different lenders is a hassle because you have to make four different payments and keep in contact with four different banks. So, you decide you're tired of having four lenders and just want one. To fix your four-bank problem, you go and visit your local lending institution. Your local lending institution agrees to help you out. You receive a loan from your local lending institution for $4,000. The next day, you visit each of the four banks and give them each their $1,000. Now, you are left owing $4,000 to your local lending institution but nothing to the four banks.
Education loan consolidation works just like that example. When you graduate college you will most likely be left with several education loans, which will all have to be paid off. Education loan consolidation simplifies the process by combining all your loans into one big consolidation loan. There are other benefits to education loan consolidation besides making it easier to manage your debt, but that'll be left for another article. But if you can't wait, check out our article Student Loan Debt Consolidation
.How to do Education Loan Consolidation
If you have education loans and you're nearing graduation, you're probably receiving numerous offers from education loan consolidation companies touting how their offer is the best. You'll even probably receive some letters that deceivingly look like they are urgent messages from the federal government telling you to contact such-and-such company about education loan consolidation. The worst is when education loan consolidation companies call you trying to get you to consolidate with them. Just be prepared, and don't fall for the sales pitches.
That brings us to the first step of education loan consolidation, shopping around for the best offer. Although the federal government sets the maximum limit for education loan consolidation interest rates, nothing stops companies from offering lower interest rates and interest rate incentives ("FAQs about Consolidation"). So, look at as many offers as possible and select the one that offers the lowest interest rate and the best incentives. Once you find the education loan consolidation company with the best deal, it's time to fill out the application. Don't panic. Education loan consolidation applications are much easier to fill out than the student loan applications you had to complete to get your original loans. Many education loan consolidation lenders have online applications that take less than a half-hour to complete, and if you run into trouble, many will have useful help lines that you can call.
After you have filled out and submitted your application, you'll then have to wait for your education loan consolidation lender to process your application and pay off your original loans. Be aware that it may be several months before your application is approved and your education loan consolidation lender pays off your old loans. Make sure you continue making the payments on your original loans until they are completely paid off by your education loan consolidation lender. If you stop making the payments, you will default on your student loans, and it will be much more difficult for you to consolidate them ("FAQs about Consolidation").
Education loan consolidation may lower your monthly payments and save you money. However, education loan consolidation isn't right for everyone, and it can actually be a detrimental choice for some. If you would like to learn more about education loan consolidation, you should read our Student Loan Consolidation Guide. The five-step guide will walk you through the advantages and disadvantages of education loan consolidation, as well as how to choose a lender and select the right repayment plan. If you want help with education loan consolidation, start with step one of our guide, All About College Student Loan Consolidation