Student Loan Consolidation FAQ\'s

Student Loan Consolidation FAQ\'s Related Information:

Here are some frequently asked questions and their answers about student loan consolidation that may help you in taking a consolidation loan. These are some of the more common issues that many students may worry about before taking out a loan, or even during the term of a loan. Hopefully, the information provided can help you to make a more informed decision.

I have not yet finished school; can I still consolidate my student loans?

No, you cannot. According to the rules of the Federal Loan Consolidation program, you can consolidate your loans only if you are in grace, repayment, forbearance, or deferment. Students still in school are not considered eligible.

Can I take more than one consolidation loan?

Yes, you can. But there are certain limitations. You cannot take more than one consolidation loan for the same eligible federal student loans. If you have any eligible loan that was not included in your previous consolidation loan; or if you have taken a new loan after your first consolidation loan, then you can take another consolidation loan for the new loan or for the one that was not included. The old consolidation loan can also form a part of your new consolidation loan along with the other eligible student loans.

I know the benefits of a consolidation loan, but is there any reason not to take a consolidation loan?

Although consolidation loans are usually very beneficial, there are some reasons not to take a consolidation loan. These are:

• A consolidation loan may cost you more money in the overall repayment of the loan.
• If you have some student loans that have very low interest rates, then it may not be wise to consolidate such loans.
• Loan consolidation fixes the rate of interest for the entire loan period. So although you can safeguard yourself against increasing rates, you may not be able to take advantage of any drop in interest rates in the future. Thus it is entirely your call whether to take the risk either ways.

Is it possible for my spouse and me to take a combined Federal Student Loan Consolidation?

Yes, it is. The program does allow for spouses to combine their student consolidation loans, but it may not be very wise to do so. When taking a combined consolidation loan with your spouse, both of you become jointly as well as individually responsible for repaying the loan. So if you and your spouse were to get separated or divorced, you would still be liable for repaying your joint student consolidation loan. As the benefits of a joint consolidation loan are not very great, it is better to take two separate consolidation loans for you and your spouse.

Can I pay more than the required monthly payment for my consolidation loan?

Yes, you can. If you have any extra money that you wish to pay towards your loan repayment, then you can do so. This will reduce your loan repayment term and lenders usually do not charge any penalties for early repayment.

Is my credit history relevant for a consolidation loan application?

Lenders of student consolidation loans do not usually do a credit check on borrowers of this type of loan. But it is necessary that you are not in default on any of your student loan repayments.

Can I change my consolidation loan repayment plans?

You can choose from a variety of repayment plans available and can also switch from one plan to another at any time during the repayment period. Most lenders allow you to change your plan without any cost to you, but you might be restricted from changing your plan more than once a year.