Student Loan Consolidation Comparison

A Student Loan Consolidation Comparison Guide:

Your student loan consolidation comparison research should consist of a few important questions. Once you have decided that it is time to consolidate your loans so that you can lower your monthly payments and maintain them easily because they will all be combined into one loan. The first step in a student loan consolidation comparison is to ensure that the only loans you hold are federal and not private loans. If you have both types of loans you will need to consolidate them separately, winding up with two separate payments per month. You should know when you take out a loan if it is federal or private. Good record keeping throughout your educational career will make this process easier.

If you are doing a student loan consolidation comparison for federal loans the process is fairly simple. First you must make sure that your loans are eligible for consolidation. Most lenders will consolidate loans that are $7,500 or more, some will even go as low as $5,000 for consolidation.  This minimum balance is the only rule that lenders can set forth for student loans. They are not allowed to turn down a loan because of the type of loan you have, the amount of the loan, or the original interest rate on the loan. Further, there is a standard calculation which the lenders use to find your student loan consolidation interest rate. Regardless of the amount of the loans that you have your interest rate can not be higher then 8.25 percent. The rate, because it is based on a rounded up average of your current loan interests, could be lower then that percentage.

You are able to shop any bank while you are doing your student loan consolidation comparison.  Some lenders may be able to offer you lower interest rates then others. It is important to understand what type of deal your original lender gave you and make sure that losing those benefits is worth a better deal from a new lender. 

When you are doing a student loan consolidation comparison for a private loan you will have to do more extensive research. The lenders for private loans have the option of charging different student loan consolidation interest rates and fees for their services. The lender will take into account your credit score in order to decide your interest rate. They also have the option of charging many different fees which will also add to the cost of consolidating your loan. In addition to application and maintenance fees the lender may have a penalty for prepayment of the loan balance. When you evaluate lenders for consolidation you must take all of these costs into consideration so that you get the best possible deal on your loan. The lenders want your business and may offer special deals by waiving fees or reducing interest rates. Be sure to let them know that you are shopping around.