Top Questions about Student Loan Consolidation Summary: Are you applying for a student loan consolidation? Debt management experts have enlisted some frequent questions and their answers which might be helpful for you.
What is the best time to apply for student loan consolidation?
If your student loan is currently in the deferment stage or repayment stage, then you are eligible for consolidation. You can also consolidate during the grace period, i.e. six months after you finish school. Debt management services experts suggest the middle of the grace period as the best option because it won’t shorten your payment-free time. How long does the consolidation process take to complete?
Normally the process takes between 30-90 days. Should I stop my regular payments once I apply for consolidation?
No, debt management experts recommend continuing with your regular loan payments until you receive official notification about your consolidation processing. Will I have to pay any processing fees for a consolidation loan?
No, there are no processing fees associated with consolidation loans, but there are repayment penalties. According to debt management experts, if you are early in the process of repaying your consolidation loan, you won’t have to pay the penalties. How much will the interest rate be?
It depends on several factors - the type of loan, the number of loans for which you have applied, the interest rates of those loans and also who processes your consolidation loan. All of these contribute to the decision about the interest rate of your consolidation loan. There are consolidation calculators which can help you calculate your monthly interest rate. Debt management services suggest getting an estimation from different lenders before you make a final decision on the consolidation loan provider. Is there any way to find information about all my loans?
Yes, you can get all the information related to your student loans from various sources, but debt management experts consider the National Student Loan Data System (NSLDS) as the best source to collect an accurate estimation. As it’s a central database, all info related to the federal Direct Loan program, loan related data from schools, guaranty agencies and lenders are stored here. Will I lose the loan benefits if I opt for consolidation?
Unfortunately this is true. As the consolidation process pays off your outstanding loans in their entirety, the specific benefits associated with individual loans are lost. That’s why debt management experts recommend weighing the pros and cons associated with consolidation before applying for it. If your student loan has a lower interest rate and other benefits like deferment or cancellation, then it’s not worth opting for consolidation.