Simple Student Loan Consolidation Facts
Learn how simple student loan consolidation works before you apply. We’ll discuss what consolidation is, loan eligibility, and rates and terms.
About Simple Student Loan Consolidation
Simple student loan consolidation comes into two forms: private loan consolidation and federal loan consolidation. Which type you choose will depend on the kind of student loans in your portfolio. With federal simple student loan consolidation, you combine all eligible loans into one new loan with one monthly payment and a low, fixed interest rate. This is a federally-sponsored program that is offered through private lenders. Federal simple student loan consolidation is free. Private simple student loan consolidation also combines existing loans into a new loan with a lower rate, but it is not backed by the federal government. Rather, this is a loan issued by private lenders, just like with any other line of credit or loan. Private simple student loan consolidation is usually credit-contingent and will carry higher interest rates and fees.
Loan Eligibility
Typically, consolidation companies will not lend to those with less than $5,000-$10,000 in student loans. This is because if you have below this amount in debt, it would not be worth it for you to use simple student loan consolidation. Loans that are eligible for simple student loan consolidation includes:
- Parent PLUS
- Grad PLUS
- Stafford consolidation loans (when consolidated with other eligible student loans)
- Supplemental Loans for Students
- Health Professions Student Loans
- Loans for Disadvantaged Students
- Nursing Student Loans
- Health Education Assistance Loans.
The aforementioned loans are all eligible for federal simple student loan consolidation. We can also help you consolidate private or alternative student loans with private simple student loan consolidation.
Rate Information
Your federal simple student loan consolidation interest rate is a weighted average of the rates of your existing loans. This number is usually then rounded up to the nearest eighth of a percent, with a maximum rate of 8.25%. This rate is fixed for the life of your simple student loan consolidation.
Terms
Here are some of the terms of simple student loan consolidation:
- If you sign up for automatic withdrawal payments, the withdrawal will occur if you are in a repayment period even if you make advance payments
- Repayment will begin immediately after your loan is disbursed
- You will lose borrower benefits on most loans you consolidate, though your consolidation loans will come with benefits like deferment and forbearance options