After graduating from college or universities, most students who borrowed student loans in order to cater for their fees find themselves burdened with a number of these student loans. In order to be able to manage these student loans efficiently, they must learn how to consolidate federal student loans. Below are some easy guidelines a student borrower could use when consolidating their loans.
Direct Consolidation Loan Program
This is a program by the Department of Education that allows student borrowers to consolidate their loans. It allows borrowers to consolidate their multiple loans into one federal student loan that will be easier to control and service. Paying several student loans will be difficult and expensive due to the high-interest rates as well as numerous payments to be made. Under this program, the student will only be required to pay payments monthly with a different interest rate altogether.
Consolidating Private Student Loans
As private student loans cannot be consolidated under the program above, a student who took private student loans can also consolidate their loans with a lender for private student loans. These lenders are not the conventional banks as this is a new sector that other unfamiliar lenders have exploited. Some of these lenders include LendKey, U-fi, DRB, CommonBond and SoFi with each having its own unique benefits and product offers. It is advisable for a student borrower to consider the private lender that offers the best lengths, mixed, fixed and variable rates. Comparing among these private lenders will be important as you will end up getting the best deal to make your loan repayments easy while saving money along the way.
Consolidating your student loans through a private lender has several benefits in that you are able to save your money on the interest. After consolidation one automatically lowers their interest rates thereby saving lots of money over the duration that they will pay their loans. Private lenders charge nothing for the whole consolidation process and for students who have great creditworthiness can get interest rates starting from as low as 2% depending on factors such as length of time and interest rates type.
How Long does it Take?
The process of consolidation is usually lengthy but the total time taken is also determined by the loan type one has as well as the route they choose to use. If you prefer consolidating the loans quickly, then the private lender route is often quicker as it could take as long as 10 days. The application is relatively easier as it only takes around 15 minutes. After it is approved, one is expected to sign a promissory note and the lender will pay off the student loans and issue a fresh loan. All the above are the necessary steps to take when looking to consolidate federal student loans.…