Compare Student Loan Consolidation

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans.

It is very similar to refinancing a mortgage.

Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%. If you are consolidating loans with different interest rates, the weighted average interest rate will always be in between.

Don't be fooled if someone tries to suggest that this will save you money by getting you a lower interest rate.

The interest rate may be lower than the highest of your interest rates, but it is also higher than the lowest of your interest rates. More importantly, the amount of interest you pay over the lifetime of the loan will be about the same. Aside from a slight increase in the interest rate on the consolidation loan, there is no cost to consolidate your loans.

There are no fees to consolidate.

Under no circumstances pay a fee in advance to get a federal education loan or consolidate your federal education loans. Other federal education loans, such as the Stafford and PLUS loans, may charge some fees, the fees are always deducted from the disbursement check. There is never an up-front fee. Student loan consolidation is easy, there are no credit checks or application fees involved, and the applicant is not required to have collateral, be employed, or have a co-signer. Borrowers will be able to select a manageable monthly amount that is tailored to their income level. With the help of a student loan consolidation calculator, they can ascertain the number of years they would need to pay off the student loan at that amount.

An extended repayment period enables them to reduce their monthly payments by as much as 60% in some cases.

Student consolidation of loans facilitates payment since borrowers will only have to issue one check each month to one lender, rather than to multiple lenders on different due dates. By consolidating their student loans, graduates will benefit from an interest rate reduction.For the majority of student loans, the standard repayment term is 10 years.

Consolidation enables borrowers to extend the period up to 30 years.

By stretching out the repayment period, monthly payments are significantly reduced and become extremely feasible, particularly for degreed individuals on entry-level salaries. Student loan consolidation can boost a borrower's credit rating, due to the fact that previous loans have been paid off. When consolidation takes place, the creditor pays in full the borrower's existing loans and combines them into a new loan. The student borrower no longer has numerous open loans with a limited payment history. Previous loans are listed as having been paid in full and this gives rise to an improved credit rating and an overall enhancement of a borrower's credit profile.

With an improved credit score, graduates can freely enter into future credit transactions with minimal hassles.

Borrowers who consolidate student loans can lock in a fixed rate of interest for the loan's term. This is financially advantageous in that graduates are protected from any future increases in the interest rate. Individuals who consolidate their student loans can save time and money by opting for automatic withdrawal of funds from their checking account. Typically, their interest rate is reduced by .25% when they authorize the automatic deduction of payments.