Student Loan Consolidation

Written By Julianna Benson on Thursday, December 27, 2012 | 11:57 PM


Student loan consolidation combines all of your student loan debts into one, lower-interest loan. When you consolidate student loans, you can lock in low, fixed interest rates, reduce monthly payments, and/or lengthen the amount of time you have to repay the loan. You can consolidate student loans using federal or private consolidation loans. You can apply for both right here on our site.

The benefits of consolidating your student loans are substantial. Almost anyone with student loans can benefit from a consolidation loan. With most student loans, your interest rates can rise considerably unless you lock in a fixed rate with a consolidation loan. Here are some of the reasons you might want to consolidate student loans:

* No credit check required for federal consolidation
* Apply online
* Combine all student loans into one easy monthly payment
* Lower your monthly payments by up to 50%
* Get up to 20 years more to repay your student loans
* Get a low, fixed interest rate that lasts for the life of the loan
* No cosigner necessary for federal consolidation
* No origination or application fees
* No prepayment penalty

Interest rates and payments

Consolidation loans have longer terms than other loans. Debtors can choose terms of 10–30 years. Although the monthly repayments are lower, the total amount paid over the term of the loan is higher than would be paid with other loans. The fixed interest rate is calculated as the weighted average of the interest rates of the loans being consolidated, assigning relative weights according to the amounts borrowed, rounded up to the nearest 0.125%, and capped at 8.25%. Some features of the original consolidated loans, such as postgraduation grace periods and special forgiveness circumstances, are not carried over into the consolidation loan, and consolidation loans are not universally suitable for all debtors.

Top consolidation lenders ranked by total FY 2006 consolidation loan originations
Lender name
       # of loans
          Amt of loans ($)
Federal Direct Student Loan Program
        1,169,110
$19,197,268,873
Sallie Mae
866,295
$19,841,423,841
Citibank
232,126
$4,843,119,089
Nelnet
198,624
$4,796,065,812
NextStudent
89,284
$3,320,024,025
JP Morgan Chase
115,777
$2,668,451,098
Goal Financial, LLC
111,426
$2,494,856,673
College Loan Corporation
75,360
$2,245,128,826
AES/PHEAA
166,730
$2,037,618,548
Student Loan Xpress
114,790
$1,880,997,383
Wachovia Education Finance
80,174
$1,674,979,763
Description: Student Loan Consolidation
Rating: 5
Reviewer: Julianna Benson
ItemReviewed: Student Loan Consolidation
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