Best advice consolidating student loans

Regardless of how the market fluctuates, borrowers will never pay more than 8.25 percent on their consolidation loans.

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Consolidating private loans works in a similar fashion, as far as paperwork goes.

The difference is you’ll need to apply through a private lender.

“With (our student loan program), if the borrower makes 12 months of on-time principal and interest payments, they can request to release the co-signer,” he says.

“That creates tremendous flexibility, especially for families applying for loans for multiple kids.” Students consolidating federal loans can do so through the Department of Education’s website at Loan gov, by phone at (800) 557-7392 or by downloading a paper application at Loan gov/borrower/and mailing it in.

Those seeking consolidation should also review their repayment options at Student gov, so they’re prepared to pick the proper repayment plan.

Once the application is submitted, the federal government estimates that it takes 60 to 90 days to officially complete the consolidation process.“If the terms you’re going to get are the not as generous as the terms you already have, consolidation is probably not a good idea,” she says.Regardless of whether consolidating federal or private loans, there is a catch.These include deferment — the ability to suspend payments under certain circumstances such as serving active military duty, attending further education or unemployment — and forebearance, which allows borrowers to postpone payments while still accruing interest, in cases of financial hardship.Federal loan borrowers can also lower their monthly payments by extending the life of their loan, having their payments capped according to their income and by having their debt dismissed after making 25 years of consecutive payments under the income-based repayment plan.But borrower protections and repayment options on private consolidation loans can vary wildly from lender to lender.