Do you feel trapped by your student loan rates? Does your student loan have a variable interest rate that just seems to keep going up? Or do you have multiple student loans or other loan programs? There is one option that sadly very few students ever consider, and that option is consolidating your student loan debt or refinancing it. One big reason to consider this option is for those with a variable interest rate you could get a fixed interest rate versus a variable interest rate or multiple interest rates in the case of those with more than one student loan outstanding.
How do you know if that’s the right option for you? Well you need to do the math and crunch the numbers and compare them with some offers for one. A consolidation calculator can help out greatly, there are many available online to choose from. If you can get a loan offer with rates or rather an APR lower than your current student loan or loans you could save greatly on your monthly payments and have more money per month left over to live on every month. Student loans can be crippling to our finances, and any tool available that helps reduce that burden is well worth looking into. There is no guarantee that you will find a consolidation loan with better rates but it is indeed worth looking into.
When you apply for a consolidation loan you are going to need all your facts and figures handy, your student loan numbers and the amounts that you owe on your loans, and what interest rates you are paying, as well as the duration of your current loans. No one loan consolidation company is better than another, with that being said they do have incentives to offer you a better rate, they are in the business of consolidating loans and no one ever consolidates to pay a higher rate. The only possible stumbling block that you could face is if you mismanaged your credit score, in which case you may need to spend the next 12 to 24 months fixing your credit score.
If you have a federally guaranteed loan you can still go for a consolation of your existing loans. The U.S. Department of Education (ED) has implemented a new Direct Consolidation Loan application process. Go to www.StudentLoans.gov and sign in to begin the new consolidation process. Private student loans can still go through the normal consolation loan process route.
I should also point out that as far as the banks go they do have some requirements as well. For example most banks require a minimum of 640 credit score (FICO not Vantage), a 45% maximum monthly Debt-to-Income Ratio, as well as a minimum monthly gross income of $2,000. If you are still in school you need a certificate of enrollment.
If you have no idea on where to start looking for student loan consolidation lenders I will provide you my top 3 picks below
SoFi – Social Finance
This company refinances both private and federal student loans and they offer 5, 10, 15, 20 year repayment terms along with no origination fees. The reason they are my top pick is that if you become unemployed they stop requiring you pay during that time and they offer help finding you a job.
DRB – Darien Rowayton Bank
This company refinances both private and federal student loans but requires that you be an alumni of a bachelors or graduate degree program.
This company refinances both private and federal student loans. They offer a 0.25% Interest Rate Reduction with automatic payments via ACH and No origination fee or prepayment penalties.