If you will be graduation soon, it’s time to start looking into how to consolidate student loans. School will generally give out some information, but it is incomplete at the best. It’s best if you start familiarizing yourself with the debt consolidation process first so you can avoid any potential pitfalls.

About Student Loan Consolidation Offers

Up until about 2007, students who took out student loans were sent many debt consolidation offers by companies until a change in the Federal lender subsidies banned this type of solicitation. However, you can still consolidate your loans – it just means you don’t have people beating down your doorsteps to do so. Actually this is a good thing – companies are much more eager for your business and will give you better offers on student loan consolidation.

What is the Consolidation Eligibility

If you happened to have had a PLUS, Perkins loan, or Federal Stafford loan, you can in fact consolidate all of them into a single debt. Any sort of private personal loan may also be consolidated – but this depends on whether or not each individual lender will agree to the consolidation. It could be, if you have other personal loans and credit card debt, you may need “several” consolidated debts – one for the student loans and one for your other debt. But it may be possible to aggregate ALL your debt.

How to Consolidate Student Loans

It’s actually quite easy to go about and consolidate federal loans. You can, of course, consolidation private loans but it is generally not as a straightforward process.

How to Consolidate Federal Student Loans

1. First make a point and compile all paperwork for your federal student loans. You may have several loans depending on your school costs and how long you have been a student. The average student will have a combination of unsubsidized Stafford loans and subsidized loans every years. In addition, you might have PLUS or Perkins loans as well.

2. You need to contact the primary loan lender. This might be the Federal Direct loan program or maybe individual lenders. This always will vary from student to student.

3. You need to ask the lender for any offer of additional rate reduction with automatic payments, or whether to follow a certain number of payments made on time.

4. In is in your interest to spend some time researching all loan terms from other online loan consolidation lenders. There are thousands of these companies and they are very competitive. Some of these companies will offer better discounts for automatic payments, or throw in extra discounts after consistent payment of 34 to 48 months. Federal changes may also add additional discounts. There is no reason why you should be looking online for private loan consolidation companies.

5. After deciding which lender gives you the best deal, contact them (websites usually have a streamlined, automated online application) and fill in the application. Make sure you choose to sign up for automatic payments. This will ensure you start paying the loan back right away. Students always have a couple months of “grace” after school, but you want to make sure you are paying back the loan when you have too – this will make sure you don’t damage your credit.

How to Consolidate Private Student Loans

1. It’s more difficult to consolidate private loans, but you still can do it – especially if you have a lo t of different private loans.

2. Get all your loan documents together

3. Make sure to research online private student loan lenders for the minimum loan balance and any interest rate requirements. You can find many online private lenders who specialize in debt consolidation. Check as many of them out as you can.

4. You should contact your current lender to ask about their consolidation offer – it could be they will have a very good interest rate.

5. If eligible to consolidate your loan, make sure you ask about any sort of automatic payment discount. Some lenders will offer the discount, but some may not. Be sure to ask though.

What are the Benefits of Consolidation?

Many people ask why or how to consolidate a loan without understanding that consolidation of student loans is not an option of you want to pay off your loan in a reasonable amount of time Consolidation offers a lot of benefits for several reasons. The first is that it’s easier to pay one time a month to a single source, rather than 2, 3, or even 10 different payments a month. This saves a lot of time. The second benefit of loan consolidation is that you can often get a lower interest rate for the aggregated debt than you might pay for each individual debt. This reduction of interest paying will reduce the amount of money you have to pay back. Consolidating a loan allows you to stretch out the life of a loan, giving you lower monthly payments. However, it’s best to pay the student loan back as fast as possible. You will save more money this way because you pay less interest over the long term. Finally, when you consolidate your loan, it’s much easier to keep track of the total annual interest you are paying. This is quite important if you want to see if you are eligible for student loan interest tax reduction. It might not be a lot, every bit counts when paying back long term loans. The above information is how to consolidate student loans.