Student loan consolidation packages promise to ease out all your worries regarding student loans. You may be curious to know just how this works. Well, firstly you need to apply for the process upon satisfying the eligibility criteria. The process of student loan consolidation is not really very complicated. Applications have a page’s length wherein you as borrower need to provide basic demographic information, list current student loans and sign the document. The rest is taken care of by the lender offering the package.
The eligibility criteria for student loans consolidation may vary depending on the loan consolidation concern. In case of the federal students loan consolidation you need to have over $10,000 outstanding federal student loans. Again you may be eligible to consolidate your loans if you are no longer enrolled more than half time in school or you are in repayment or in a loan grace period (i.e. 6 months after leaving school, in general). It is also necessary that you have had not previously consolidated your loans. There are also certain specific loan classes which may be eligible for federal student loan consolidation process.
Upon consideration of your application the loan consolidation program will lower your monthly payments by lengthening the term of your loans. The loans to be consolidated may have been of different types and may even have been offered by different lenders. Depending on the kinds of loans being consolidated by you a subsidized or an unsubsidized consolidation loan will be provided.
The rates of interest to be set are determined. This is usually not more than the weighted average of all the loans consolidated by you. The lower the fixed rates of interest guaranteed the more lucrative is the offer. Besides, other borrower benefits may be provided too. In case of federal student loan consolidation which is a part of the family loans that have been made available by Federal Family Education Loan Program (F.F.E.L.P.) of the federal government it is the U.S. government which guarantees the loans. These loans have certain favorable terms and conditions like fixed and reasonable rates of interest and term periods extending even to 30 years which are a cut above the rest.
While processing your loans the loan consolidation concern works with the lenders presently holding your (existing) student loans to set up the consolidated product for you. Alongside the consolidated student loan package notification on how to make payments is also provided by your loan service provider. Thus the student loan consolidation process works towards making your student loans more manageable and help you in securing better repayment terms.