For students who often struggle to meet a number of loan payments even after school graduation, Student loan consolidation happens to be a popular and possibly the best option. It involves merging a number of loans, whether taken from federal or private institutions, into a single big loan with a fixed interest rate that is easily payable and more convenient to deal with. While students look for student loan debt consolidation, these are 5 of the top questions that are asked commonly.
- How can I apply for a loan?
First of all, you have to determine the kind of loan that you want to obtain – whether federal or private. Once you have decided on the type, look for agencies that offer excellent deals in this matter. Know about their interest rates, terms and conditions, eligibility criteria and monthly paying procedures among other things.
If you are unable to do all these, you can get in touch with financial counselors and seek consultation from them. Their advice in this matter can be highly useful for you.
- How does loan consolidation work?
After a specific agency approves your consolidation loan application, it pays off the different lenders that you owe money to, and the entire balance is rolled into a single, consolidated loan. You will have just one loan with a fixed rate to pay off.
- How do you decide the eligibility?
In case all your loans are in deferment/forbearance, grace or repayment, one of them can be eligible. Loans that happen to be in-school are impossible to be consolidated until the time you leave school or complete the graduation.
- What is your grace rate?
It is indeed possible for you to consolidate your loans during the grace period. It is essential for you to keep in mind that you have to write about the year and month of the end date of the grace in your application. The rates that are in effect during the time of application will be used for determining the rate while calculating the weighted average. Following consolidation, you can find out about the rate of interest charged on the loan through rounding off of the weighted average interest rate to the closest 1/8th %. The process of student loan debt consolidation is so designed that the rate of interest is only hiked in small increments. This, however, does not indicate that the cost of your loan would be changed in some way by the weighted interest rate. It is also important to know that the new interest rate that is charged yearly must be somewhere between the normal market rates.
- How can I know about the interest payment rate?
You might find your total interest amount paid and the payments looking similar. It is a good idea to use an online Loan Consolidation Calculator and enter the different rates of interest. Once your loan application has been approved, your monthly account statement and disclosure will include the interest rate and the exact payment amount.