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What's up party people? I'm currently a college student and I was wondering a few things.
1) What are the steps I need to take to go about consolidating my loans?
2) How will the terms of my loans be affected?
3) How long does the consolidation process take?
4) Will future loan disbursements be automatically consolidated or will I need to manually do that myself?
Thanks!
Hi, the Direct Consolidation process is available through the Department of Education at www.studentloans.gov. It typically takes 2-3 months. During this time, it's also a good idea to choose a payment plan based on your income, if the Standard payments are too high.
The Direct Consolidation process itself will combine all of your loans into one, with a single loan servicer and payment. Your Direct Consolidation loan will still be divided into two parts: subsidized and unsubsized. The interest rate will remain a weighted average, rounded up to the nearest 1/8th of a percent.
You can add future loan disbursements from a different degree, for instance, by re-Consolidating as long as you have additional loans to add. You won't be able to go through the process until you're at half time or less enrollment though.
Also - keep an eye out for student loan relief companies that try to claim they offer a separate consolidation product. They just fill out the government paperwork for you and take credit for the process.
@Anonymous wrote:Hi, the Direct Consolidation process is available through the Department of Education at www.studentloans.gov. It typically takes 2-3 months. During this time, it's also a good idea to choose a payment plan based on your income, if the Standard payments are too high.
The Direct Consolidation process itself will combine all of your loans into one, with a single loan servicer and payment. Your Direct Consolidation loan will still be divided into two parts: subsidized and unsubsized. The interest rate will remain a weighted average, rounded up to the nearest 1/8th of a percent.
You can add future loan disbursements from a different degree, for instance, by re-Consolidating as long as you have additional loans to add. You won't be able to go through the process until you're at half time or less enrollment though.
Also - keep an eye out for student loan relief companies that try to claim they offer a separate consolidation product. They just fill out the government paperwork for you and take credit for the process.
Thanks for the comprehensive reply. It definitely clears a lot up for me.
Does consolidation change the time period in which your loans should be paid off? For instance, my loans are scheduled to be paid off in 2027, if I were to consolidate, will I have a new paid off date?
Something tells me that I would, but I'm only asking to be sure of it.
Yes, when you consolidate your loans you'll get a new payment schedule based on the total amount. The standard repayment is 10 years, but you can choose an extended repayment if the total is over a certain amount. The good news is that you can always pay extra without penalty, so you can plan to have your loans paid off much sooner.
@SCF wrote:Yes, when you consolidate your loans you'll get a new payment schedule based on the total amount. The standard repayment is 10 years, but you can choose an extended repayment if the total is over a certain amount. The good news is that you can always pay extra without penalty, so you can plan to have your loans paid off much sooner.
Thanks for the response. I have a significant amount to pay off between my undergrad and grad loans. I'am currently looking into consolidating to have one payment, and reduce my monthlty payment and it looks like I will have to reset my payment schedule to do so.