Students or Parent Loan Consolidation

Consolidation loans provide students or parents with the facility of combining multiple student loans into a single one. A loan for consolidation is obtained from a single lender. Loan taken for the purpose of consolidation is actually used to pay off to the previous loan balances. Most of the federal loans including FFLP, FISL, Perkins, HEAL, NSL and direct student loans can be consolidated. In case, you had received a private education loan, you have the facility of getting private consolidation loans. You need to pay no extra amount to avail of a consolidation loan, except a slender increase in the interest rate.

Students and parents should take the advice that they pay no advance fees in order to get a federal education loan or to consolidate the same. When you consider consolidating student or parents loans, you need not rush. Be careful, as you might be a victim of an advance fee loan scam. Remember, there is no upfront fee to consolidate these loans. In case some lender asks you to pay some fee in advance, probability is that it is an advance fee loan scam.

Whether you are a student borrower or a parent borrower, both of you can choose to consolidate your education loans. It should be noted that a student loan and a parent loan can not be combined for a single consolidation loan. Both of these education loans need to be consolidated individually. If both the loans have been received from a single borrower, they can be consolidated together. Earlier, married students or couples were allowed to consolidate their loans together. However, this provision was cancelled due to some discrepancies. Today, married students have no more facility of consolidating their education loans together.

In terms of consolidating loans, there are some differences between a student loan and a parent loan. While students have the option of loan consolidation during the grace period or when the loan repayment period begins, parents can decide to consolidate the PLUS loans anytime they want. While choosing to do so, you (whether students or parents) can choose any lender and get their loans consolidated. You should be ready to make the most of this opportunity. As there are no restrictions on the selection of lender, you can shop around and handpick a lender that suits your specific requirements and offers lower interest rates and good discounts.

Minimum balance conditions may vary from lender to lender. A number of lenders offer you student consolidation loans or parent consolidation loans after checking out the minimum balance requirement. You may across a lender that will offer its services only if your loan balance is at least $7,500. Therefore, students and parents need to select a lender that matches their individual requirements and suits the purpose. Apart from this minimum loan balance requirement, no discrimination can be done against borrowers by any lender.

Though a student or a parent can consolidate any federal education loan, you may have to face some restrictions when you want to consolidate a consolidation loan. First and foremost, a consolidation loan has the restriction of being consolidated only once. Fresh loans (that were not consolidated earlier to the consolidation loan) must be added to be able to reconsolidate a previously obtained consolidation loan.

In case of reconsolidation of a consolidation loan, the rates will not be relocked. In other words, the consolidation loan is considered to be a fixed rate loan, which is further used to calculate the rate of interest on the new consolidation loan. According to restrictions introduced of late, you may also lose the facility of switching lenders when you consolidate a consolidation loan. Only when you exclude one of the loans from the consolidation, you will reserve the right to switch lenders in future. The standard repayment plan offered through student loan consolidation is a 10-year repayment. However, you can also avail of several alternate repayment options including graduated repayment, income contingent repayment and extended repayment.

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