Best Student Loan Consolidation Rate- Your Ultimate Guide

Students consolidate their student loans to combine all their loans into one loan to ease their monthly payment process. The federal and the private student loans are consolidated to get a better repayment plan. Consolidating your private student loan can get you a better lower rate of interest as private loans are usually lent at a higher rate of interest and this is based on your credit score. To get a loan consolidated at an affordable rate of interest you must compare various plans available to you before you settle at one offer. Hence this article guides you through the consolidation process and how to select the consolidation of your student loan at the best rate.

Table of Content

What is Student Loan Consolidation?
Private Student Loan Consolidation
Federal Student Loan Consolidation
Fixed rate v/s Variable rate
Drawbacks of Consolidating Federal Loans with a private lender
Choose between Private or Federal Loan consolidation
Should you consolidate your Student Loan?
Conclusion

What is Student Loan Consolidation?

Student Loan Consolidation has a primary objective of combining multiple student loans into one loan with a varied rate of interest as compared to the interest you borrowed you loan. It is calculated as a weighted average of all the interest rates and this can be lowered based on your credit history of your previous monthly payments you made. This helps in managing the monthly payments, time while loan repayment.

This can save your money by lowering the rate of interest and flexible repayment plan. Consolidation is offered to federal loans and the private lenders also offer consolidation of your student loan.

Private Student Loan Consolidation

Under the Private Student Loan Consolidation, you can consolidate your private student loans at a private lender as this combines all your private loans and benefits you to make a single monthly payment. This could be helpful if you are financially stable and fetch you a fixed rate of interest.

You could also refinance your private loan with a consolidated loan to get a lower rate of interest and a fixed interest over a variable rate of interest. Consolidating your private loan does not depend on your credit.

Do you meet the criteria to qualify for the Private Loan Consolidation?

The eligibility criteria vary for a private student loan consolidation as a private lender has a unique requirement for the consolidation. Here are some criterias to be eligible for a private loan Consolidation,

The borrower must be a citizen or a legal resident of the United States.
The borrower must have a certain employment, education and be financially stable.
However the private loan consolidation is independent of the credit, the borrower must have a minimum credit to consolidate private loan.
The money borrowed must be greater than the minimum amount to be eligible for a private student loan consolidation. If your debt is less, you may not be eligible.

Private Student Loan Consolidation Rate

The rates of interest of the private loan consolidation are lower compared to the Direct consolidation Loan, however, it depends on the credit score. This is possible with various factors such as , you are financially stable, good employment and educational background, if you made payments on time, The best rates to consolidate your private student loan with a private lender are given:

LENDER	FIXED APR	VARIABLE APR	LOAN TERM
LENDKEY	3.39%-7.75%	1.9%-8.55%	5-20
EARNEST	3.03%-6.38%	1.89%-6.38%	0-20
COMMONBOND	3.21%-6.45%	2.02%-6.30%	0-15
EDUCATION LOAN FINANCE	3.14-6.69	2.39-6.01	0-15
COLLEGE AVE	3.54%-6.25%	2.62%-6.12%	0-20
SPLASH FINANCIAL	3.48%-7.03%	2.43%-7.84%	5-15

Read about the Student Loan Consolidation Companies for better understanding of how to choose a private lender to consolidate your student loan.

Worried about your student loan? Find the Best Student Loans for you!

Federal Student Loan Consolidation

The Direct Consolidation Program avails the federal servicer to combine all your federal loans and gives you a loan with a rate of interest to make monthly payments easier, if you qualify for this program.

After you qualify for a Direct Consolidation Loan Program to consolidate yourloan the repayment plan starts within 60 days after the loan gets disbursed. You are given to choose the repayment plan according to your need.

You must apply online for a Direct Consolidation Loan Program at StudentLoans.gov. To know more about the the consolidation program and if you are eligible, go through the StudentLoans gov.

Do you meet the criteria to qualify for the Direct Consolidation Program?

Here are some of the eligibility requirement to apply for a Direct consolidation program,

You are eligible for the Direct Consolidation Program if you borrowed federal student loan, except the Parent PLUS loan.

Read about the best Federal Student Loans you can borrow to be eligible or a Direct Consolidation Program.

You are eligible for consolidation once you graduate or drop out of school midway.
The loan can be consolidated once you start your repayment or at your grace period.
You cannot consolidate a loan twice and if your loan is defaulted, you must make three monthly payments to be eligible for consolidation.
You Can apply for Direct Consolidation Loan Application and Promissory Note to register for your student loan consolidation.

Federal Student Loan Consolidation Rate

The best Student Loan Consolidation Rate is to have a fixed rate of interest throughout the repayment span.

A fixed rate of interest is preferred over the variable rate of interest as the variable rates change according to the market.

The rate of interest for a consolidated loan is the weighted sum of all the existing loans. The rate is rounded up to 1/8th of a percent and there is no fee charged for it. The rate of interest of the consolidated loan is independent of your credit history and you cannot negotiate based on it. As The credits you gained by making the monthly payments is lost and the credit is noted fresh with the payments made after consolidating your loan.

Difference between Fixed rate v/s Variable rate

Fixed rates of interest to you student loans is a fixed amount to be paid on borrowing your loan. This interest is fixed and does not vary according to the market rate. The payment and the rate of interest you pay monthly doesn't change through the period of repayment.

A Variable interest rate on your student loan borrowed with change according to the markets interest rate. As your monthly payment varies and you must find the fluctuating interest amount every month to make payments.

The private student loan consolidation could get you a lower rate of interest, and change from a fixed rate of interest to a variable interest or vice versa

It is ideal to switch from a variable interest to fixed interest as you could be aware about the known interest amount you make instead of worrying about the changing interest.
However you could choose a variable interest rate if you are willing to pay your loan soon and to get a lower interest rate.

Read about the comparision between the Fixed v/s variable Rates of Interest and how it can affect your student loan in detail to be aware while selecting the interest on your loan borrowed.

Drawbacks of Consolidating Federal Loans with a private lender

Here are some of the disadvantages of consolidating a federal student loan with a private lender,

A federal loan comes with many benefits such as a forgiveness program, forbearance, Deferment, and loan discharge options, But when you consolidate federal loan under a private lender, these benefits are lost.
The borrower protection under the federal loan are lost.
The repayment plans become inflexible.
Before choosing for a consolidation of federal student loan with private lender you must check for other alternatives to get a lower interest rates and better repayment plan.

Choose between Private or Federal Loan consolidation

Confused between choosing a federal consolidation or a private lender? You can decide the consolidation of your student loan with a Direct Consolidation Loan or a Private lender depending on the type of loan, loan status and the credit history, however The federal loan consolidation does not depend on your credit history.

You can also check your loan status by logging in to the National Student Loan Data System to track your loan, its status and other information

If you have a Federal loan, you are most likely to consolidate it through the Direct Federal Consolidation Program to make sure the benefits are not lost and you get a fixed rate of interest with lower payment to be made monthly.
If you have a private student loan, you can consolidate through a private lender to get a lower rate of interest and this happens if you have a credit history, well employed and thinking of clearing your debts soon.

Should you consolidate your Student Loan?

Consolidating your student loan is beneficial to graduates who are at their grace period or at their repayment phase who are finding it difficult to pay their monthly installments. This lets them manage their loans and make monthly payments easily.

You can judge upon consolidating your student loan based on various factors, such as the type of student loan you borrowed, status of the loan, the interest rates, etc.

Read about Should I Consolidate My Student Loan? to make a better decision before consolidating your loan, which gives you a better idea about consolidation, how it works and some Pros and Cons.

Conclusion

Consolidating is a program mainly passed to benefit the students to manage their loan payments easily. You must wisely choose between the loans you borrow in the first, then the consolidation and refinancing your student loan to have a better repayment plan without being worried about the dates of payment. These programs help you maintain your credit score and in turn paying off the debts easily. You must be aware about what type of interest you choose on your loan as this can affect during the repayment phase. The rates of interest play an important role while repaying your loan hence you can take your time before you choose your loan and other options associated with the loan.