Student Loan Consolidation

Consolidating Your Student Loans

Most students have borrowed money to fund their post-secondary education, and they owe, on average, about $10,000, according to the Department of Education. If you have student loan debt, paying off your loan or loans is crucial and consolidating your student loans into one debt is one way to do it. Repayment affects your credit rating and credit rating determines your ability to buy a car or even find a good place to live. Like a home owner who refinances a mortgage, you can refinance your student loans to lower your payments and lower the interest (the amount you're paying for the privilege of borrowing). Consolidating your student loans means you'll pay less in the long run.

Student Loan Consolidation Services
Consolidating your student loan and lowering your loan payments can raise your income. You should consider using a student loan debt consolidation service if loan repayment is confusing to you, if you have several loans, or you have a mix of private and federal student loans. A loan consolidation service may lower your interest, lower your payments, maximize your income, and clarify the repayment process. Since loan consolidation services are competing for your business, they offer inducements for consolidating your student loan debt with their company. They may offer lower interest rates when you automatically deduct payments from your checking account or when you apply for your loan online. Be sure to shop around to get the best deal.
Private Student Loan Consolidation

Education Finance Partners is dedicated to providing a simpler way to pay off private student loan debt so you can get more out of life. Now you can consolidate your existing private education loans into a single new loan with a low fixed or variable interest rate, low monthly payments and the convenience of a single monthly payment.

The pop–with a blazing reversed headline that read “Student Loan Refinancing” with a promise to reduce my payments by $100 to $500 per month”–took me directly to a form that sought to procure information. The student loan consolidation eligibility form–which boasted that “The Next 2 Minutes Could Save You Hundreds of Dollars” and promised a whole bunch of things.

It all smelled bad, but I was taken aback by one key field …
I suppose that they thought I would rest assured by the claims that “This is a free, U.S. Government program (no fees or other charges)” and that there were “No credit checks” and :”No pre-payment penalties”. I guess they thought I would be happy to “have to write just one check each month for your student loans” and that my “payment will be reduced by as much as 60% each month” …

As if.
To their credit (or not), the alleged student loan consolidation company stated that they would take the information without a social security number. But they would not take that information over the Internet without the SS#. Nope. If you wanted to check for eligibility without submitting that number, you had to call their toll-free number.
I’m a lucky guy. I don’t have to worry about a whole bunch of student loans hanging over my head. Then again, I’m not a 7-Series BMW driving orthopedic surgeon, either. (Oh wait, those guys don’t have to worry about student loan consolidation, either.)
If you believe that student loan consolidation might make sense for you, look for one that’s reputable. Not one that advertises via spyware.
Advertisers need to learn that there’s a right way and a wrong way to place ads on the Internet. Placing ads via invasive adware/spyware pop-up schemes is the wrong way–whether it’s for student loan consolidation, dating services, or what have you …

Student-Loan Consolidation Programs
Convenience and Cost Savings Are Key Benefits

While interest rates on education loans are currently at low levels, they may begin to rise again. For students with several federal education loans, a federal consolidation loan can provide a way to continue benefiting from today's low rates. A federal consolidation loan pays off the student's other federal education loans and allows him to lock in a low fixed rate. The program also offers the convenience of making only one loan payment per month, instead of several payments.

What to Look for in a Loan
How do you go about choosing a federal consolidation loan? The key terms for federal consolidation loans are the same, regardless of the lender. No lender may charge any extra fees to the borrower, such as origination or application fees, or a prepayment penalty. Lenders are all subject to the same interest-rate formula, although they may charge less than the maximum allowed. Federal law also establishes the payback period.

When comparing federal consolidation loans, find out what benefits, such as a lower interest rate, are available from each lender. Ask the lender to estimate how much its particular benefits will reduce the total amount of all payments for the loan if payments are made on time. For example, if a lender offers a five-year loan with monthly payments of $100, then the total amount of all payments for this loan would be $6,000 (5 years × 12 months per year × $100 per month). Then find out the total amount of all payments for other lenders and compare those to the $6,000 figure offered by this particular lender. If another lender offers a number of less than $6,000, then that would be a cost savings. A figure higher than $6,000 means an additional cost. If payments are not made on time, then penalties may be charged, and this would increase the total amount of all payments on the loan.

Watch Out for Private Loans

While private consolidation loans are also available, be aware that private lenders are not subject to the terms stipulated for federal consolidation loans. Private loans may involve fees, variable rates, or prepayment penalties. Furthermore, certain benefits are not available on a private consolidation loan. These include benefits such as federal interest subsidies during a deferment period, in which the federal government pays the interest on a loan during the period in which payments are deferred. Federal consolidation loans are therefore the better way to g

Fixed Rates May Change to Variable
While locking in a low fixed rate can save you money, be aware that fixed rates may eventually be a thing of the past. This is because when Congress reauthorizes the Higher Education Act, all federal student loans subsequently issued may be subject to variable rates. If this measure is enacted, loan rates will fluctuate each year according to the general direction of interest rates, and monthly payments will be adjusted accordingly.


The financial impact of variable rates over the life of a consolidation loan will depend on whether rates go up or down. Declining rates will lower the monthly payment, while rising rates will increase the monthly payment.