Consolidated Student Loans, How To Consolidate Student Loans - Finance - Debt Management

Have you taken several student debts during the years and want to do something with them, before the repayments began? Have you read about the benefits of the consolidated student debts but dont know, how to get them?

Not all banks want to offer the consolidated student debts, but you can try from Chase, NextStudent, Student Loan Network, and Wells Fargo. It is odd, that the original lenders are in many cases not willing to consolidate, so some work is needed. The benefits are the lower monthly payments through lower interest rate and longer running time. But there are disadvantages also.

1. Do You Have Federal Student Debts?

The Federal Direct Consolidation Loan Program allows you to consolidate the federal debts. This program offers several repayment schedules and the target is to make the loan management to fit to your situation. Even if you have taken the federal debt through a private lender, you can use this program.

2. Private Loans.

First, you cannot consolidate private student loans with the federal ones. The reason is simple. The federal ones have better terms. Because the consolidated student loans are marginal products for the lenders, several lenders have skipped them from their product portfolios. This makes the market smaller, but still the shopping is the only way to get good terms, because private loans have no fixed terms.

3. The Importance Of The Credit Score.

You may have taken your loans, when you were a student and you had zero income. If you have graduated and got the first job, the credit score has improved. This means better terms for the consolidated student loans, but only for the private ones. The Fico credit score will determine, whether you will get the loan and what the original rate will be.

The federal loans have fixed rates and fees. Most probably the interest rate of the private loan will be tied to some benchmark index, like prime rate, for instance. This means, that when the prime rate will increase or decrease, so will the rate of your consolidated private student loans.

4. The Student Loans Benefits.

When a graduate plans the consolidated student loans he or she has to take into account, that he will probably lose some of the benefits, which the original loans included. Most of these included price advantages and when the debt will be consolidated they will disappear. This is an important thing, which a borrower has to go through with the lender, before signing anything.

5. You Can Take A New Loan And Pay Away A Part Of The Student Debts.

This can be one option, which fulfils your loan portfolio. You can ask from the credit unions, wheteher it is possible to get a new loan with which you can pay away a part of the student loans and to make the debt program more favourable to you. If your student debt is a variable rate one, you can replace it with a fixed rate normal debt.