Student Consolidation Loans are a excellent way to reduce the amount of your monthly
student loan payments, reducing the interest rates you're paying on student loans, and make
managing your student loan repayments much easier on a month to month basis.
Getting a student consolidation loan is easy, fast and free if you're eligible. In essence, you're
simply getting one loan big enough to pay off all your outstanding student loans. Then you
repay just that one loan each month, instead of trying to juggle multiple lenders, payments,
and rates.
Either college students or parents of college students can get student consolidation loans,
but there are eligibility requirements that must be met in either case.
If you're a college student, you can't consolidate your loans until you've graduated or stopped
attending school. And of course if you don't have multiple loans or lenders, then a student
consolidation loan would be useless to you.
If you've already graduated or stopped attending school though, your student loans must be in
good standing. Either you're still in the grace period which usually lasts about six to nine
months, or your loans are in deferment, or you've already started repaying those loans and
your payments are up to date. If your student loans fall into these scenarios, then you're
eligible to get a student consolidation loan.
Now student consolidation loans have many benefits. One of the biggest is having a much
lower overall monthly loan payment. In fact, it's common to reduce your monthly student loan
payments by as much as 50% when you roll them into a consolidated loan.
Student consolidation loans also tend to have lower interest rates - particularly if interest rates
were much higher when you first took out your student loans. A student consolidation loan will
use a weighted average for your new interest rate. That weighted average is based on your
existing student loans. So if you have some with higher interest rates, and some with lower
interest rates, the two will work with each other to bring your weighted average into a more
reasonable range.
Student consolidation loans also make your paperwork load lighter. Instead of having to
manage multiple loans, balance statements, lender contact information, interest rate
information and writing multiple checks each month, you're able to reduce it all down to just
one loan. One check is written each month, one statement has to be kept track of and so on.
Another benefit to consolidating multiple student loans that doesn't occur to most people, is
that it can help your overall credit score. The FICO credit scoring system uses a proprietary
algorithm to determine your credit score. And one of the things used in that algorithm is the
number of outstanding creditors you have. If you have a lot of outstanding creditors or open
credit accounts, your FICO score could be lowered because that looks like more of a risk. If
however, you consolidate multiple student loans into one, it then looks like you've paid off
multiple accounts - which looks good all by itself - and you've effectively reduced the number
of outstanding current accounts. The FICO scoring system will see this as a good thing, and
increase your credit score accordingly.
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