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2 Easy Ways to Consolidate Your Student Loans

  October 13

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student-849825_1920When you’re 18 and everyone around you is visiting colleges, and you’re being barraged by one question over and over again: “So where are you going to school?” It seems only natural to start looking into those schools yourself. To find the best one for your interests. To get the best degree you can, and to have the best four years of your life. No matter what you end up deciding, it’s always smart to keep your student loan consolidation options in mind.

If you are able to pay for college, whether through working and attending at the same time, a savings account, or a trust fund, you won’t have to worry about loans the way some people might. But for many people, college is an enormous expense that they have no means of paying for. So, at 18, student loans are applied and signed for, to be dealt with in the future. When you have a degree in your hand and a job. Your Dream Job, of course!

Flash forward four years: graduation has come and gone, and your six-month grace period on those loans has come and gone. Now what? You haven’t found that dream job just yet, and the bills are already piling up.

Don’t worry! There are options. Consolidating your loans is an easy way of making your payments without defaulting on your loans, and creating a manageable system for yourself while you figure things out. Here are two options for student loan consolidation.

The Direct Loan Consolidation Program: Consolidation for Federal Student Loans

Under the Direct Loan Consolidation Program, offered by the Department of Education, graduates are able to consolidate multiple smaller loans into one Direct Consolidation Loan. The resulting loan will have a “weighted average” interest rate.

The Good: Having one loan is much simpler than having multiple small loans, and keeping track of the payments. One loan, one payment, and you’re good to go.

The Bad:  The new loan may end up costing you more in interest due to rounding in percentage calculations!

The Application: The application is totally free, and can be found at The application takes about 20 minutes to complete, and consists mainly of personal student information. This program does not use a debt vs. income calculator, which makes most students eligible for the program.

Private Consolidation for Private Loans (aka Student Loan Refinancing)

The Good: Student loan refinancing allows students to combine multiple private loans into one loan, while also potentially lowering the overall interest rate. And, depending on the lender, students might also have the option of combining both federal and private loans into one loan.

The Bad: Most private refinancing programs do not have the advantage of consumer protection that the federal programs have.

The Application: To apply for student loan refinancing, students can complete applications, which requires verification of the student’s school, income, identity, and credit score. In order to be approved, most banks require a FICO score of 740 or higher, and a maximum debt to income ratio of 45%. Employment history and a completed degree certificate must also be provided in order to apply.

If approved, students are typically notified within one week, with the new loan being disbursed within 30-45 days of the application. Finally, if a student was not approved, an explanation will be provided as to why they were not applicable for student loan refinancing.

Student loans are easy to apply for, and feel like the time to pay them off might never come. But all too quickly, the letters and bills begin showing up in the mailbox, and it’s easy to get overwhelmed. The important thing is to realize that there are plenty of options when it comes to student loans. These two loan consolidation options offer struggling students the option of easier, more manageable payment options, and the peace of mind to know that their loans can and will be paid off.

Did you consolidate your students loans? Did you ever think about consolidating them?

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