Federal Student Loan Consolidation

When looking into Federal student loan consolidation, one thing everyone wants to know is rates. What is the current federal student loan consolidation rate? The rate of course is going to vary some, but for the most part it is around 6.8%. Although the different plans as well as the interest rates are largely regulated by Federal Laws, you may also have some different options depending on your situation.

Student loan interest rates under Federal plans are ordinarily determined on the basis of the average of all student loan interest rates together. The rate of also fluctuates periodically. For example the Federal Student Loan Consolidation interest rates during July 1st 2006 to June 30th 2008 were 6.8%. The current private refinancing rates are either fixed or variable at about 3.3% to 8.77%.

For instant information on this you can log on to any of the numerous websites that provide such information on student loan consolidation interest rates. However it would be better to do some research about the credibility of the provider before accepting the information or advice provided.

What Student Loans Can Be Consolidated?

Federal student loan consolidation combines multiple federal loans into a single federal loan through the Department of Education. You may need to consolidate to be eligible for some federal loan repayment programs, but federal consolidation won’t lower your interest rate. It may lower your payments by extending them.

  • Federal Perkins Loans
  • Nursing Student Loans
  • Nurse Faculty Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • National Direct Student Loans
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • FFEL Consolidation Loans and Direct Consolidation Loans
  • Federal Insured Student Loans
  • Guaranteed Student Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized and Nonsubsidized Federal Stafford Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students
  • National Defense Student Loans
  • Parent Loans for Undergraduate Students
  • Auxiliary Loans to Assist Students

Can you consolidate federal student loans with private loans?

No, But… No, it is not possible to use the federal Direct Loan consolidation program to combine your federal student loans with private loans, but it is certainly possible to combine private and federal student loans. You just need to refinancing them with a private lender first.

Is there a downside to refinancing student loans?

Yes there is one big downside and that is you lose federal repayment protections. Although, deferment and forbearance options offered by some of the best refinancing companies are likely to fall short of what’s offered by the federal government. The Department of Education lists several ways you could qualify for up to three years of mandatory forbearance.

Can consolidated student loans be forgiven?

This is very good news because current relief is limited. They are not eligible for Income-Based Repayment (IBR), nor are consolidation loans that repaid them, but they are eligible for Public Service Loan Forgiveness (PSLF) if consolidated. One form of relief that may help is Income-Contingent Repayment (ICR).

Basics of the student loan consolidation interest.

Interest rates for the Stafford loans both subsidized and unsubsidized ones fluctuate periodically, though they never go beyond 8.25%. However when you consolidate your loans the weighted average of all the prevailing interest rates of your existing loans are taken in to consideration to calculate the applicable interest rate.

A consolidation during grace period could be beneficial.

Though ordinarily the consolidator cannot guarantee you any specific rate or reduction before the consolidation process is over it could be better to go for such consolidation in the grace period. For example, if you have taken a student loan prior to the first day of July you might have a variable interest rate.

Is Student Loan Consolidation a Good Idea?

Its isn’t a bad thing to do, but sometimes it is not always the best idea. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default. However, direct consolidation loans are now the only type of federal student consolidation loan. Something else to keep in mind is interest rates for consolidation loans are fixed.

Does student loan consolidation hurt your credit?

For the most part the answer is just no. Consolidating your student loans also won’t affect your credit score much. It can be overwhelming and confusing to have many payments to a bunch of loan providers, so it can simplify things to concentrate on a single loan payment. Federal consolidation doesn’t incur a credit check, so it won’t hurt your credit score.

How many times can you consolidate student loans?

Once, that is all. You can only consolidate student loans one time. If interest rates fall after you consolidate, tough break for you. You are stuck with the interest rates you agreed to during consolidation. So just be careful when you do finally look into consolidation of your student loans. Granted the interest rate is not going to fluctuate that much, so in the long run you will not be paying a ton of extra in interest when you’re talking just a few or fractions of a percentage point.

Can you consolidate already consolidated student loans?

Yes you can. You can consolidate all, just some, or even just one of your student loans. Consolidation is similar to refinancing a loan. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.

In such cases it could be beneficial for you to have your college loan consolidation during the grace period to have the best student loan consolidation rates. The only point to look after is that your application should reach the consolidator before the grace period is over. On receipt the consolidator will include the end date of your grace period and will complete the consolidation process on expiry of the grace period and consolidate student loans giving you a reduced rate.

Should I consolidate or refinance my student loans?

Yes, many student loan borrowers can benefit from refinancing or consolidating. Should you consolidate or refinance your loans? If you want to lower your monthly payments, you can refinance to extend your repayment term. If you’re drowning in federal student loans, you can consolidate into a single monthly payment.

How Do You Get Student Loans Forgiven?

To receive loan forgiveness under this program, you must be a full-time employee (at least 30 hours per week) in public service job and make 10 years of on-time monthly payments (120) after consolidating your federal loans in a qualified repayment program.

Performance is ultimately what really matters. Federal Student Loan forgiveness is an exceptional concept applicable to students only under certain circumstances. It means the loan amount received by students might be cancelled in half or in full amount by Federal Government. It is not impossible and depends completely on your work performance. If you want to be one of those special students who want to be a recipient of Federal Student Loan forgiveness, then act your best.

You just need to show your excellent performance in the following ways:

  • Organize and perform volunteer work
  • Organize and perform military services
  • Teach / preach / practice medicine in selected communities
  • Make a thorough research and meet other criteria specified by loan forgiveness programs

In case of volunteer work, loan forgiveness is conducted by Ameri Corps, where the student needs to serve for one full year, get stipends and extra amounts that can be used towards loans. In another organization, Peace Corps, volunteers can specially apply for deferment of variety of loans like Stafford, Consolidation loans and Perkins loans with partial cancellation of Perkins Loans.

Apart from these fields, there are other ways where Federal Student loan forgiveness program becomes successful. These fields include Bachelor’s Degree in Colleges of Arts and Sciences, where student will perform the job required in institutions. Students who receive the Michael Murphy Loan specially for studying Law enforcement, probation and parole, law and penology or other significant fields related to these studies, can work off one-fifth per year to get enrolled under Federal student loan forgiveness plans.

What credit score do I need to refinance student loans?

You or your co-signer generally need a credit score at least in the high 600s to qualify for student loan refinancing. Lenders’ minimum credit score requirements range from 650 to 680.

Is it worth refinancing student loans?

The bottom line is, if you have multiple student loans, a good paying job, and decent credit (or a cosigner), refinancing your loans is probably the right answer. However, if you rely on one of the federal programs, such as income-based repayment, it’s best to stick with that until you’re in a stable financial place.

What are potential drawbacks of using a Federal Direct Consolidation Loan?

A few potential downsides to consolidating your federal student loans under the Direct Consolidation Loan program are, you might pay more interest, consolidation will extend the repayment period , perhaps to 30 years and this lowers the monthly payment.

Do student loans go away after 7 years?

Normally, a defaulted debt will fall off a report after 7.5 years from the date of the first missed payment. A defaulted federal student loan, older than 7 years may not appear on a credit report. Because there is no Statute of Limitations, collections can and will continue.

How can I get rid of student loans without paying?

There are a few different way you can get rid of student loans without paying. Enroll in income-driven repayment plan, this will lower your payment down to almost nothing in many cases. Pursue a career in public service. Apply for disability discharge. Investigate loan repayment assistance programs (LRAPs). Ask your employer to pay for your training, assuming it is job related. Serve your country.

What happens if you never pay your student loans?

If you don’t make your payment, your loan goes into delinquency status. If you still don’t pay, your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government can all take action to recover the money you owe for your student loan debt. This is never a wise idea, it will scar you for life, your credit and your ability to do many things in the future.

How Does Student Loan Consolidation and Refinancing Work?

If you need to consolidate student loans then carefully observe the pros and cons of consolidation. Before going for student loan consolidation, think about the following factors:

  • In the consolidation process, all your loans are treated as single and have fixed interest rates. Whether the rate increases or decrease, it is not going to affect you. So, if the rates are going to plummet, it is better for you to wait and watch.
  • Make sure that you can consolidate student loans as you can avail consolidation for most federal loans which includes FFELP loans, Perkins, NSL, Guaranteed student loans, FISL, Health Professional Student loans, HEAL, and direct loans.
  • Remember that consolidation extends the loan term due to which overall you have to pay more even if the rate is low.
  • Consolidating all the loans is not a good idea because the rate of interest is fixed after finding out the average of all the interest rates and you may like higher rate loan to be out of the consolidation.

Pros of student loan consolidation:

  • Multiple loans are converted into single loan.
  • It reduces monthly installments by a considerable amount.
  • Improves your credit ranking and is easy to pay monthly installments.
  • No checking of credit, no origination or application charges.

How long does it take to get approved for student loan consolidation?

Consolidation can take anywhere from 30 to 90 days; in rare cases, it may take longer. Why does this take so long? The process involves the transmission and processing of payoff statements, called Loan Verification Certificates (LVCs), which can take time.

How can I get the lowest student loan refinance rate?

  • Shop around
  • Have excellent credit
  • Apply with a co-signer
  • Sign up for autopay
  • Get any additional discounts that apply
  • Decide between a fixed and variable rate
  • Pick the shortest loan term you can manage

What age does student loan get wiped?

The debt is wiped after 30 years (ish) or if you die. Student loans only have a fixed life, though the exact time depends on which loan you have. It’s also important to note that if you die the debt is wiped.

Is now a good time to consolidate student loans?

You can consolidate all, just some, or even just one of your student loans. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea. Direct consolidation loans are now the only type of federal student consolidation loan.

Will student loan interest rates go down in 2020?
The plunge in interest rates could reduce borrowing costs for students who take out federal loans for the 2020-2021 academic year. That’s a sharp drop from a year ago, when the rates were 4.53% for undergraduate loans, 6.08% for graduate loans and 7.08% for PLUS loans.

What is the best student loan consolidation program?

  • Citizens Bank: Best Lender for Loans of Up to $350,000
  • College Ave: Best Lender for Exclusively Offering Student Loans
  • Discover: Best Lender for No Application, Origination Or Late Fees
  • Earnest: Best Lender for Borrowers With a FICO Credit Score As Low As 650

What are the benefits of student loan consolidation?

Mainly, lower payments. Consolidating your federal loans can lower your monthly payments by giving you up to 30 years to repay your loans. The interest rate on a Direct Consolidation Loan is a fixed interest rate, which means it will remain that way for the duration of the loan.

Jason Smith

Former Marine, IT Guy & Builder of Websites.  I have 5 US states left to visit. I enjoy hot springs, adventures, hiking, photography, sci-fi, wine, coffee & whiskey.  I am fluent in sarcasm, name that tune, & speak in movie quotes.  I spend most of my time building websites, fixing computers, metal detecting, magnet fishing and gaming occasionally.

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