FEDERAL CONSOLIDATION LOANS

SHOULD I CONSOLIDATE MY EDUCATIONAL LOANS?
Students can consolidate multiple federal student loans with various repayment schedules into one loan with a lower monthly payment. All federal education loans (Subsidized Stafford, Unsubsidized Stafford, PLUS, GRAD PLUS, and Perkins) are eligible for consolidation. Federal consolidation loans are eligible for deferment, forbearance, and repayment options similar to the Federal Stafford loans. Interest rates and repayment terms vary among lenders.  The disadvantage of consolidating student loans is an increase in the total cost of repaying the loans. Consolidation can double total interest expense because of the longer repayment period. Consolidating loans may also require that the borrower forfeit “borrower benefits” unique to the loan program and lender that the student chose to use for Stafford or Federal Credit-based loans.  Borrowers should check with their Stafford lender to see if borrower benefits would still apply after consolidation.  Students should compare the cost of repaying their unconsolidated loans with the cost of repaying a consolidation loan. Use this on-line loan calculator to see if consolidation is in your best interest: http://www.finaid.org/calculators/loanconsolidation.phtml .

WHEN SHOULD I CONSOLIDATE MY EDUCATIONAL LOANS?
Students can consolidate during their grace period, once they’ve entered repayment, or during periods of deferment or forbearance. Some lenders will suggest that students consolidate prior to July 1 to lock in on the current interest. By doing so, students may give up some of their grace period which is a period that does not require repayment. The decision to consolidate before the grace period ends to lock in an interest rate and start payments earlier or to wait until the end of your grace period is simply the students. Remember the grace period is the six months prior to the loan repayment start date.

HOW DO I BORROW A CONSOLIDATON LOAN?
When choosing a lender, the student should make certain that the lender offers Federal consolidation loans. By doing so, the lender remains eligible for federal deferment, repayment, forbearance, and cancellation options. CAUTION: Beware of lenders that let students consolidate consumer debt with federal student loans.  Federal consolidation loan lenders will not let students consolidate consumer debt with their federal student loans.  Using a non-federal consolidation loan lender can forfeit deferment, repayment, and cancellation rights unique to federal student loans.  Although students can shop around for “better deals”, it is always in the student’s best interest to contact the holder of their federal student loans first.  By doing so, the student is certain to consolidate with a federal consolidation loan lender.  Pre-Approval is available on line for most lenders.