How to Consolidate Student Loans: 10 Things You Need to Know

how to consolidate student loans

Did you know that 75% of students in private universities had to take out loans in 2016 in order to pay for their education?

That’s over half of students in America!

If this is you, and you are struggling to dig yourself out of a deep hole of student debt, you are not alone.

Your negative bank account should not ruin your sweet nostalgia about your college years.

Below are 10 things you need to know about how to consolidate student loans:

1. Why Consolidate Your Loans?

Ultimately, it can make life a lot easier for you.

If you have taken out student loans from multiple places, you probably have found that paying them off can be a pretty complicated process.

Especially when you have different loans, different lenders, different interest rates, different payments…

Luckily, Debt Consolidation can allow you to bundle and possibly refinance all those different loans into ONE loan package with ONE payment plan.

Therefore, making it easier and faster for YOU to finally pay off your student loans!

And it’s not just about simplicity either. Loan consolidation has a plethora of benefits.

For example, you can get lower interest rates or even extend your payment plan by learning how to consolidate your student loans.

2. Sounds too Good to be True. Am I Eligible?

As long as you are not currently in school and are making payments toward you loans, you may indeed qualify for student loan consolidation!

In addition, you must have at least $5,000 in loans and a moderately fair repayment history.

Important points to note:

You cannot consolidate loans with different owners. So if your loans are in your parents’ names you may be eligible to consolidate only some of your loans.

Secondly, you cannot always refinance different types of loans. For example, private loans with federal, Stafford with Direct loans, etc.

In addition, some loan consolidation programs also require the individual to be a US Citizen or permanent resident, aged 18 or over.

3. Student debt is Just Impossible! Maybe I’ll Just Declare Bankruptcy.

Bad idea because guess what?

Student debt is the only type of debt that NEVER disappears… NEVER.

Perhaps you’ve charged too much onto your credit card accounts or are struggling to pay off your mortgages.

However, if you ever find yourself in a rut financially, you can just declare bankruptcy, right?

No more debt no more problem, right?

Wrong. While bankruptcy can erase other loans and debt, it does not erase student debt.

In other words, when you take out a student loan you will need to pay it back regardless of how badly you may deferring on those loan payments.

This is why it would be in your best interest to figure out how to consolidate student loans.

HELP! Show Me How to Consolidate Student Loans!

Without further ado, here are some of the best loan consolidation programs we know.

4. Obama Student Loan Forgiveness

Also called the Pay As You Earn repayment program (PAYE), the “Obama Student Loan Forgiveness Plan” essentially makes it easier for student debt to be forgiven.

No matter how much you owe, once you’ve made a certain number of monthly payments and are below a certain income, you may be able to refinance your loans or have them be forgiven completely.

Even though Obama is no longer in office, in June 2014, President  Obama signed an executive order extending the program to students who took out their loans before October 2007.

5. Teacher Loan Forgiveness

Ever wanted to be a teacher? Well, here’s some great news for you.

The Teacher Loan Forgiveness Program was created in order to encourage Americans to enter the profession.

Some eligibility requirements include teaching full-time for 4 years and working with low-income families, among others.

If you do qualify, you may be eligible for a total of $17,500 in loan forgiveness!

6. Public Service Loan Forgiveness

Participants of The Peace Corps, America Corps, or another not-for-profit government organization… this one is for you.

The PSLF program offers those who have worked in public service forgiveness on the rest of their Direct Loans.

You qualify if you have made 120 monthly payments (among other regulations).

Please note: this program only applies to Direct Loans. If you happened to consolidate your Direct Loans previously, you may lose eligibility status for PSLF.

Read more here.

7. Other Loan Consolidation programs:

If you are really savvy, you may even use a credit card, a home equity loan, or a personal loan to pay off your debt.

These options aren’t for everyone and will depend on your personal financial goals, as well as your individual financial situation.

There also exists programs for those with disabilities such as the Total and Permanent Disability (TPD) discharge program.

The bottom line is you have a plethora of options are your disposal.

8. BEWARE OF SCAMS!

That being said, while there are many ways to save money, there are a lot of scammers out there, so be careful.

As with everything you do, make sure you know your numbers. Otherwise, you could end up paying a lot more than you should!

As previously mentioned, it is also very important to know what types of loans you have when it comes to how to consolidate student loans.

Different types of loans have different rules and implications. You should know what those implications are!

9. Why Student Loans Should Scare You Just a Little Bit:

Tick… tick… tick…

Do you hear that? That’s the clock that starts as soon as you graduate from college. You have 10 years to pay off your student loans (and student loans never disappear by the way, even if you declare bankruptcy).

As of January 2016, 43% federal student loans holders are either behind on their payments or simply not making ANY payments.

In 2012, 71% of all students graduating from four-year colleges had student loan debt. That represents 1.3 million students graduating with debt, up from 1.1 million in 2008 and 0.9 million in 2004.

This number has only increased since.

10. Still Panicking? Just Remember You’re Not Alone.

All in all, people of all ages, in all types of financial situations, across the country are applying for student loan consolidation.

To be expected given the fact that today, the average person graduates with $37,172 in debt. 

Let’s face it! Education is expensive! 44.2 million Americans are trying to pay off that shiny diploma hanging on the wall.

If you want to know how to consolidate student loans and pay your loans off faster, it could be in your best interest to ask for help.

Check out our website for more tips and tricks to achieve a better financial future!