Federal Student Loan Consolidation-Facts you Should Know

If you are considering federal student loan consolidation, there are several important facts of which you should be aware.

Shop around for Lenders

Many students and parents believe that if their loans are held with a single lender they must consolidate their loans with that lender. This is no longer true. This rule was repealed in June, 2006. Students and parents now have the right to consolidate their loans with any lender, even if all their loans are held with the same lender. This gives borrowers the option to shop around for lenders in order to obtain the best terms and rate.

Requirements for Federal Student Loan Consolidation

Be aware that most lenders will require a minimum balance before they will consolidate your student loans. That balance varies from one lender to the next, so be sure to ask before getting started with federal student loan consolidation. The Federal Direct Consolidation Loan program has no minimum balance for consolidation loan requests.

You should also know that any federal education loans can be consolidated.

A consolidation loan can be consolidated only once. In order to consolidate it again, you will need to add on loans that were not previously consolidated.

Advantages of Federal Student Loan Consolidation

Federal student loan consolidation provides a way to often reduce the size of your monthly payments. This can be done by extending the term of your loan beyond the original 10 year repayment plan that is the usual standard for federal student loans. The actual length of the new term of the loan depends on the loan amount. It may range from 12 years to 30 years. Be aware that while extending the length of your loan can make the monthly payments more affordable to manage, the interest paid over the lifetime of the loan is increased.

Federal student loan consolidation programs also allow you to choose between alternative repayment plans, such as:

• Extended repayment
• Graduated repayment
• Income contingent and income sensitive

Ready to roll your loans into one single loan with federal student loan consolidation? Studentloans.info can help you get the process started, answer questions and walk you through the process.