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Information about consolidating student loans

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Dealing with long-term debt can be difficult, but having a strategy and tools can help.Consolidating or refinancing student loans are two popular options that could help you manage your payments, save money and open up additional options for loan forgiveness and repayment.

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The servicer you choose for your consolidated loan will inform you when it pays off the existing loans, at which point you can stop making those payments and start repaying your Direct Consolidation Loan.To facilitate the consolidation, a lender will pay off your current loans and issue you a new loan for the total amount you owe.This type of consolidation won’t save you money on interest, but it can make it easier to manage your loans with a single payment each month.Here are some additional requirements: If you just graduated with three federal Direct Subsidized loans, one for $10,000, one for $6,000 and one for $5,000, and you get a job earning $65,000 a year in San Francisco, you’ll pay off the loans in 10 years and pay a total of $27,409 once you start making payments under the Standard Repayment Plan.Kantrowitz encourages borrowers to compare both the monthly payment and the total payments over the life of the loan when considering consolidating or refinancing loans.Your monthly payments will be fixed on the standard plan, or start small and slowly increase on the graduated plan.

If you’re consolidating loans that are in a grace period, you can ask the servicer to delay processing your request. Once you’ve filled in all the required sections, you’ll have to sign and submit the application.

Some debt relief companies offer to consolidate your loans for a fee, but this isn’t necessary. You’ll have to submit your name, address, Social Security number, driver’s license state and number, contact information and two references who’ve known you for at least three years. This information should be on your monthly billing statement.

“Never pay a fee to consolidate your student loans,” says Kantrowitz. You don’t need to consolidate all your loans, and doing so may be a bad idea in some circumstances.

When you refinance your loan, you can choose a five-, seven-, 10-, 15- or 20-year term.

Common Bond will match your federal loan deferment period if you graduated the same year you apply and your loans are currently in grace period deferment.

You have the option of listing loans that you don’t want to consolidate but that you want factored into your total loan balance. You can choose among Great Lakes Higher Education Corporation & Affiliates, Navient, Nelnet or Fed Loan Servicing.