What is consolidating

If the servicer delays processing, you won’t have to make your first payment until the end of your loan’s grace period. You can submit it online or mail the completed paper application to one of the servicers that manages Direct Consolidation Loans.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.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.It’s not difficult to qualify for federal student loan consolidation, but you do have to meet certain criteria.Most, but not all, federal loans are eligible for the program.

Or, you may research your options and determine you shouldn’t use either.

Here are some additional requirements: If you just graduated with three federal Direct Subsidized loans, one for ,000, one for ,000 and one for ,000, and you get a job earning ,000 a year in San Francisco, you’ll pay off the loans in 10 years and pay a total of ,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.

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.

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