1. Determine your needs

First, make sure student loan consolidation will benefit your specific situation. If you are doing well paying your current student loan bills on time or they are almost paid off, you’ll likely save more money keeping them as they are. Inspect your loan contracts to see if there are any pre-payment penalties which may offset any savings you might gain from reconsolidation. Contemplate whether the convenience of an extended payment term is worth the cost compared to your current student loan payment plans. Also, take into consideration that if you are or will be in a public service occupation and are or will be eligible for federal student loan debt forgiveness after 20 years, you will reset your debt payment timer and have to start over from the beginning with the newly consolidated loan to become eligible again.


2. Clean up your credit

Consumers are encouraged to review their credit reports annually. You can receive one free copy per year from each of the three main credit bureaus- Experian, TransUnion, and Equifax. Ordering these ahead of time can allow you to see anything that might cause a hike in interest rate such as an unpaid debt or a debt that has been paid but hasn‘t been reported as such yet. If you see something erroneous, call the responsible company directly to discuss it with them and request that they have it removed from your credit report. It can take several months for your credit report to be updated.


Also, if you have a current student loan in default you’ll want to resolve that before getting it consolidated. This status will negatively affect any interest rate offers you get while shopping for your consolidation loan, resulting in a much higher cost than you might otherwise enjoy. More importantly, while it is still technically eligible with most lenders, consolidation doesn’t automatically reverse a defaulted loan’s status and it could remain on your credit report as defaulted indefinitely, even after the consolidation loan disbursement has paid the debt completely.


Student Loan

Student Loan Consolidation

3. Get everything together

Make comprehensive lists for each of your existing loans on separate pieces of paper with their individual details: the name of your lender; whether it‘s a federal or private lender; interest rate; whether pre-payment penalties are charged; monthly payment amount & due date; total amount borrowed; total balance due; and dates & amount of all payments which have been made. Organize them inside a small binder, sectioned according to private or federal lenders, then by amount due from highest to lowest. Although most private loan consolidation companies will not consolidate federal student loans with private student loans, some may offer this option so having those separate sections to refer to will be helpful. Also keep copies of your original loan contracts and updated credit reports in this binder. Having all of your information together in one place will streamline your application processes and therefore make researching and finding the best student loan consolidation for your situation much easier. Keep close track of this binder, though, since it is now equipped with extensive amounts of your personal information.


4. Shop around

Armed with your inspected credit reports and itemized organized loan paperwork, start making appointments to speak with several different banks and lenders to find out what your options are. As you receive consolidation offers, file them inside your student loan information binder. Showing these to other loan officers in your search for the best interest rate may encourage them to undercut their competition with better offers in an effort to gain your business.

When shopping for a loan consolidation pay especially close attention to the details regarding interest rates, origination fees, pre-payment penalties, payment length options, and co-signer release options if you‘ll be using a cosigner. Make sure you know whether your interest rate is going to be fixed or variable and what that‘ll mean for the future of your loan. Also, if you have multiple or extensive loans, understand that you may not find a consolidation loan to cover them all since many lenders have a consolidation loan amount maximum, often around $150,000 to $200,000. If you can’t fit all of your current student loans under the umbrella of one consolidation loan, narrow it down by choosing the ones with the highest interest rates.


5. Choose the cream of the crop

After speaking with at least five or six different lenders and getting their terms and offers, choose your best two or three options to move forward with. These should be the ones with the most acceptable terms overall, including interest rate and payment length term, and should encompass as much of your current overall student loan debt as possible. Contact these lenders and arrange for one more meeting to try to negotiate a lower interest rate or better terms, and discuss the fine print of their standing offer. Don’t be afraid to bring up issues that you might have such as cosigner release not being offered or an origination fee being charged. They may attempt to work with you to make the terms more acceptable.


6. Make it official

After you’ve done all the legwork and researched your options extensively, it‘s time to choose just one. This student debt consolidation loan is going to be a permanent part of your life for the next five to twenty-five years and will forever affect your credit. That positive or negative effect is directly related to your ability to make the payments regularly and according to your contract, so you should have confidence that the terms and conditions are going to work for you. It’s regular practice for lenders to quote a range of possible interest rates before finalizing their offer so hold off signing anything until you’re sure you’re ready to make a final decision. After you’ve made your choice and are ready to sign, confirm in writing all the items that you’ve discussed with the lender, making sure that you’ve locked in your agreed upon interest rate and review the fine print to make sure there are no hidden surprises. Read many more from homepage posts